Technical Bounce Props Dollar

Dollar found some respite in the Tuesday session despite little positive news to alter the US economic outlook. The $ rebounded from an 18-year low against the Aussie and recovered toward the 1.4140 level versus the euro. With another bout of dismal housing data, we perceive todays move as a technical one and a pause to further decline over the coming weeks.

The August pending home sales report showed continued deterioration, falling by greater than consensus forecasts, down 6.5%, albeit an improvement from Julys 12.2% fall. Traders will look to tomorrows August non-manufacturing ISM reading, durable goods orders, jobless claims, and factory orders. We expect continued weakness in the aforementioned figures, deteriorating from the previous reading.