The Dollar justifiably rallied in the wake of the Fed’s promise to be patient because the Fed also indicated they would be data dependent. In other words, the Dollar bulls could have thrown in the towel off the idea that global deflationary pressures were set to keep the Fed handcuffed, but instead the currency trade remains upbeat toward the Dollar off the idea that positive US data ahead will justify a return to the early December highs. Therefore we would view the Dollar to be vulnerable to this morning’s initial claims as an unchanged or slightly higher result in claims could put the Dollar into a minor slide. Words from Putin provided a bounce in the Russian currency and that might pressure the Dollar early, but since the Russian leader offered up nothing to end or alter the crisis facing Russia, we wouldn’t expect Russian currency gains to remain in place for long. Pushed into the Dollar today we favor the downside as 2 of 3 data points might show a little weakness in the economy and the Fed has asserted they have become more data dependent.
Technical Outlook: Stochastics trending lower at midrange will tend to reinforce a move lower especially if support levels are taken out. The cross over and close above the 18-day moving average indicates the intermediate-term trend has turned up. The market’s close above the 2nd swing resistance number is a bullish indication. The next downside target is 87.72. The next area of resistance is around 89.91 and 90.27, while 1st support hits today at 88.64 and below there at 87.72.