U.S. DOLLAR INDEX (DXU6)
The DX opened higher at 85.43 after comments from BoJ officials that the proposed 'rate increase' may not be necessary and news that the Euro-Zone reduced its growth outlook for the next two quarters. After slidding to a morning Lo of 85.32, better than expected data on the Trade Deficit helped the DX climb to a morning Hi of 85.75. Prices drifted to 85.55 as we approach the afternoon session. The DX managed to scratch out another 5 tics during the afternoon to close the day at 85.60, up 57 tics. The close above the 18-day MA and improving momentum indicators may hit more 'stops' as inflation fears continue ahead of Fed Chm Bernanke appearance before Congress. Without the prospect for another 25bp rate increase, the DX could fall out of favor against the EC. Longs should tighten 'stops' or purchase a 'put' to reduce exposure. A higher open should find Resistance at 85.90 and 86.19, while an open below 85.45 may find Support at 85.16 and 84.71.

 
CANADIAN DOLLAR (CDU6)
The CD opened lower at .8824 and jumped to a morning Hi of .8852 as higher energy/metals prices supported the move. As the DX added pressure, the CD followed most other major foreign currencies lower to a morning Lo of .8790, before bouncing to .8826 as we enter the afternoon session. As the DX held onto its gains during the afternoon, the CD managed to add another 6 tics to close at .8832, down 20 tics. The CD was helped by a stronger energy/metals complex, but will need a weaker DX to recover off the 'over-sold' levels after the 'dovish' outlook from the BoC to keep rates on 'hold'. Target Support at the .618 Fib Ret level will need to hold, otherwise 'stops' underneath' could send prices lower. A higher open should find Resistance at .8859 and .8885, while an open below .8824 may find Support at .8798 and .8763.

 
BRITISH POUND (BPU6)
The BP opened lower at our initial Support level of 1.8431 and bounced to a morning Hi of 1.8439, before retracing on DX strength to a morning Lo of 1.8335. Prices bounced to our secondary Support level of 1.8376 as we begin the afternoon session. The BP could not attract any 'bargain-hunters' as sellers dominated the session, sending prices lower into the close of 1.8357, down 135 tics. With Jobless Claims reaching a 4-year high, the prospect of the BoE raising rates seems rather slim in an environment that is 'rate-sensitive'. The close below the 9-day MA changes the s/t trend to 'negative' as momentum indicators head lower, suggesting lower prices ahead. A lower open may find Support at 1.8315 and1.8273, while an open above 1.8377 should find Resistance at 1.8419 and 1.8481.

 
EURO-CURRENCY (ECU6)
The EC opened lower at our initial Support level of 1.2787 and bounced to a morning Hi of 1.2791, before a weaker growth forecast for Q3 along with a stronger DX sent the EC to a morning Lo of 1.2733. Prices rebounded to 1.2760 as we begin the afternoon session. The EC continued to trade around our secondary Support level of 1.2749, before bouncing to a close of 1.2758, down 70 tics. The close below the 9-day MA changes the s/t trend to 'negative' as momentum indicators weaken, suggesting lower prices ahead. Traders will need more conviction of the proposed need for a 50bp rate increase, otherwise spec's will exit and take the rate 'premium' out. A lower open may find Support at 1.2730 and 1.2703, while an open above 1.2761 should find Resistance at 1.2788 and 1.2819.

 
JAPANESE YEN (JYU6)
The JY opened lower at .8765 after comments from the BoJ that a proposed 'rate increase' may not be needed at this time. Traders 'dumped' Yen and rotated into the DX after better U.S. Trade Balance data and potential for further U.S. rate increases, sending the JY to a daily Lo of .8720. Prices rebounded to an afternoon Hi of .8749, before drifting lower into a close of .8738, down 108 tics. The 'gap-lower' open and negative close below the 9-day MA changes the s/t trend to 'negative' and weakens momentum indicators. Traders will look to the Target Support of .8674, otherwise prices will seek lower levels. A lower open may find Support at .8716 and .8695, while an open above .8742 should find Resistance at .8763 and .8789.