DOLLAR HOLDING UP AS THE NASCENT CORRECTION STALLS

As Treasury yields begin to drift lower it has seemed as though the dollar bulls had lost control, with the prospects of a corrective move growing. However, maybe there is still some life left in the dollar bull run as the nascent corrective move is being held up today. The trade weighted dollar index may have retreated from its recent peak of 102.05 but there is support at 100.65 that is still holding. Today’s moves show support again and there is little real significance yet to the dollar correction which may still yet prove to be short lived. Several key markets priced against the dollar have got significant overhead supply that could prevent a significant corrective move for the dollar. Watch for confirmed moves above $1.0710 on EUR/USD, above $1200 on gold and below 111.35 on USD/JPY as trigger signals for a continued correction. The oil price is though far more concerned with developments at the meetings involving OPEC members in Vienna. Whilst Iraq appearing to be co-operative is helpful, the Russians have yet to declare anything their position yet and this is a concern. Volatility is likely to be high in the coming days and headlines will drive trading.