After failing to reach new high ground during Monday’s trading, the Euro is starting to face long liquidationand profit-taking as its rally has run out of near-term upside momentum. Although the region’s economic data andsentiment readings have generally avoided any negative surprises during the past few weeks, weak earningsreports from several major European banks may have caused a moderate flare-up of risk concern this morning.There have been more than enough indications of steady Euro zone growth over the past few weeks to feel thatthis longer-term rally has further upside left to go, but the Euro may need reinforcement from key data points laterthis week in order to resume its uptrend. The December Euro should find near-term support around the 137.46area during today’s trading, but may have to rely on slack US numbers in order to put the brakes on this near-termpullback. The Commitments of Traders Futures and Options report as of October 8th for Euro showed Non-Commercial traders were net long 69,330 contracts, an increase of 1,583 contracts. The Commercial traders werenet short 64,070 contracts, an increase of 1,776 contracts. The Non-reportable traders were net short 5,259contracts, a decrease of 194 contracts. Non-Commercial and Non-reportable combined traders held a net longposition of 64,071 contracts. This represents an increase of 1,777 contracts in the net long position held by thesetraders.
Technical Outlook
EUR (DEC): Studies are showing positive momentum but are now in overbought territory, so somecaution is warranted. The close above the 9-day moving average is a positive short-term indicator for trend. It is aslightly negative indicator that the close was lower than the pivot swing number. The near-term upside target is at138.3574. The market is approaching overbought levels with an RSI over 70. The next area of resistance isaround 138.0950 and 138.3574, while 1st support hits today at 137.6650 and below there at 137.4975.