Positive vibes from this morning’s Euro zone and German PMI data, as well as from news that the”Troika” will return to Greece this week, have helped the Euro make a sizable rebound back above its lateSeptember and mid-October lows this morning. However, the Euro may have difficulty getting past last week’ssurprisingly low Euro zone inflation reading as Thursday’s ECB meeting is squarely on the market’s near-termhorizon. Last week’s 3 cent decline may have taken enough pressure off the ECB so they can avoid making anyfresh easing measures at Thursday’s meeting, but there clearly needs to be definitive improvement from theregion’s “hard” economic numbers in order for the Euro to regain strong upside momentum. The December Euromay bounce up towards the 135.28 level later this morning, but looks to have further downside left to go beforefinding a near-term floor. The Commitments of Traders Futures and Options report as of October 22nd for Euroshowed Non-Commercial traders were net long 63,543 contracts for an increase of 2,979 contracts. TheCommercial traders were net short 56,603 contracts, an increase of 3,702 contracts. The Non-reportable traderswere net short 6,940 contracts, a decrease of 724 contracts. Non-Commercial and Non-reportable combinedtraders held a net long position of 56,603 contracts. This represents an increase of 3,703 contracts in the net longposition held by these traders.
Technical Outlook
EUR (DEC): The market back below the 40-day moving average suggests the longer-term trendcould be turning down. Momentum studies trending lower at mid-range could accelerate a price break if supportlevels are broken. A negative signal for trend short-term was given on a close under the 9-bar moving average.The market’s close below the 1st swing support number suggests a moderately negative setup for today. The nextdownside objective is now at 134.0225. The market is approaching oversold levels on an RSI reading under 30.The next area of resistance is around 135.4650 and 136.2425, while 1st support hits today at 134.3550 and belowthere at 134.0225.