The December Euro has been unable to shake off the impact of some fairly dovish comments from ECB President Draghi during yesterday’s session, and may be showing early signs of an extended move below the 135.00 level over the next few sessions. Today’s German IFO Business survey was the second disappointing sentiment reading in as many days, and is creating further headwinds for the Euro this morning. While the Euro has held onto a large portion of its post-FOMC meeting gains well into this week, it may be difficult to hold onto these lofty price levels if the market’s focus shifts back across the Atlantic and onto conditions within the Euro zone. The December Euro may slide down to the 134.76 area later today, and is looking more and more vulnerable to a large-scale pullback from these current price levels.
Technical Outlook
EUR (SEP): Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The market’s short-term trend is positive on the close above the 9-day moving average. The close below the 1st swing support could weigh on the market. The next upside target is 135.7050. The next area of resistance is around 135.2700 and 135.7050, while 1st support hits today at 134.6100 and below there at 134.3850.