While surviving a retest of yesterday’s low and recovering back towards unchanged levels, the Euro isshowing few signs of making any quick return to the recent highs anytime soon. Talk from several ECB officialsdampening expectations of new long-term loans to banks may have provided some measure of support, as wellas news that Italian T-Bill yields reached a 3-month low at today’s auction. However, the Euro will need to seemuch more improvement in global risk sentiment, both from events in Washington and from their side of theAtlantic, in order to regain strong upside momentum. The December Euro may find decent support just above the135.00 level this morning, and should avoid another slide down to a new monthly low as long as the market’sfocus remains on the ebb and flow of Washington budget developments.
Technical Outlook
EUR (DEC): Declining momentum studies in the neutral zone will tend to reinforce lower priceaction. The market’s close below the 9-day moving average is an indication the short-term trend remainsnegative. The close below the 2nd swing support number puts the market on the defensive. The next downsideobjective is 134.1575. The next area of resistance is around 135.8550 and 136.5774, while 1st support hits todayat 134.6450 and below there at 134.1575.