The December Euro drove up to a new 71/2-month high early this morning, but was unable to sustain upside momentum and has given back a moderate portion of those overnight gains. Today’s set of Euro zone data points may not have produced especially robust results, but a downtick in Euro zone Unemployment will underscore a theme of slow and steady growth from the region. Italian political problems may still be smoldering, but are unlikely to generate fresh market-moving news headlines until tomorrow’s confidence vote. While global markets may be some distance from fully embracing a “risk on” attitude, today’s focus on events in Washington will help the Euro to remain in fairly close proximity to the overnight highs. The December Euro may bounce back towards the 135.72 level later today, but may have to wait until this week’s ECB meeting and Italian political problems are both out of the way before making any sizable upside extension from these current price levels.
Technical Outlook
EUR (DEC): Rising stochastics at overbought levels warrant some caution for bulls. A positive signal for trend short-term was given on a close over the 9-bar moving average. The close over the pivot swing is a somewhat positive setup. The next upside objective is 136.0175. The next area of resistance is around 135.6550 and 136.0175, while 1st support hits today at 134.8650 and below there at 134.4375.