By Michael Boutros, Currency Strategist The greenback was fractionally weaker at theclose of North American trade with the Dow Jones FXCM Dollar Index(Ticker: USDOLLAR ) off by just 0.02% on the session. Equitymarkets spent the entire day paring early losses carried over fromEuropean trade with news that China had cut its 2012 growthforecast to 7.5% from 8.0% weighing on broader market sentiment.The move opens the door for further easing from the PBoC suggestingthat the economy may ultimately face a ‘hard landing’.Stocks closed well off session lows but ended the lower on the daywith the Dow, the S&P, and NASDAQ off by 0.11%, 0.39%, and0.86% respectively. The index continues to hold above key dailysupport at confluence of former channel resistance dating back tothe January 13th, the 50 & 100-day moving averages, and the 50%Fibonacci extension taken from the August 1 st and October 27 th troughs at 9850. A hold above this levelremains paramount for the dollar with a break below eyeingsubsequent daily targets at the 9800-mark and the 38.2% extensionat 9755. Note that the daily relative strength index is nowencountering trendline resistance dating back to October 3rd with abreach here suggesting further topside moves for thegreenback. An hourly chart shows the index continuing to range between soft support at 9875 and soft resistance at the 9900-mark. We favor buying into dollar weakness with a breach above 9900 eyeing intra-day targets at 9920 and the 61.8% extension at 9950. Only a move below the 9840 congestion region negates or short-term bias with such a scenario eyeing subsequent support targets at 9800, 9775, and the 38.2% extension at 9755. The greenback advanced fell against three ofthe four component currencies highlighted by a 0.34% declineagainst the Japanese yen. The USD/JPY outlook remains weighted tothe topside with intra-day pullbacks offering favorable longentries. For complete scalp targets on the USDJPY refer to thismorning’s
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