Sluggish risk appetites and the inability to clear the 138.00 level have fueled moderate amounts of longliquidation in the Euro this morning, although prices have held their ground in close proximity to the recent highs.A key element to the Euro’s recent strength is that there have been few fresh risk concerns coming from the EUitself, which has encouraged a recent trend with Asian central banks towards shifting their reserves out of Dollarsand into Euros. With more than 2 cents in gains during the past week, it may not take much in the way of freshEuro zone problems to cause a sizable near-term setback, but the Euro will likely need a much higher valuationfrom these current levels before ECB officials are prompted to take any easing actions. The December Euro mayfind near-term support on a retest of the 137.38 level later today, and looks to further upside left to go before thelonger-term rally runs out of steam.
Technical Outlook
EUR (DEC): The rally brought the market to a new contract high. Momentum studies are trendinghigher but have entered overbought levels. The market’s short-term trend is positive on the close above the 9-daymoving average. There could be more upside follow through since the market closed above the 2nd swingresistance. The near-term upside target is at 138.8775. The 9-day RSI over 70 indicates the market isapproaching overbought levels. The next area of resistance is around 138.4950 and 138.8775, while 1st supporthits today at 137.1850 and below there at 136.2575.