With the Fed’s Rosengren calling for patience with respect to US rate increases ahead it is not surprising to see the Dollar under some modest early pressure this morning. In fact, the Fed’s Rosengren made a specific link between the potential negative influences of sharply lower oil prices and entrenched deflation and that argument hits home after the sharp reversal in oil prices yesterday. One has to think that the Dollar is also under some modest pressure because of a recent pattern of softer than expected US scheduled data and therefore the trade is likely to embrace this morning’s weekly initial claims result, which is expected to bounce back after a surprise outsized decline last week. The trade will also see a Challenger layoff report which posted a rather significant decline last month! With US trade data, monthly retail sales results and Productivity readings, there should be enough data to come away with a fresh view on the direction of the US economy. Initial up-trend channel support is seen down at 93.72 and that critical support level rises to 93.89 on Friday morning.
Technical Outlook: Declining momentum studies in the neutral zone will tend to reinforce lower price action. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The market setup is supportive for early gains with the close over the 1st swing resistance. The next downside target is now at 93.59. The next area of resistance is around 94.86 and 95.05, while 1st support hits today at 94.14 and below there at 93.59.