In spite of yesterday’s huge intra-day bounce, the Euro has seen little upside-follow this morning and maybe waiting on today’s US jobs data for a fresh boost of support. While the ECB rate cut clearly wrong-footed amarket that was expecting steady policy out of Thursday’s meeting, ECB President Draghi’s post-meetingcomments were not as dovish as traders would have expected given their surprising policy move. Wellentrenched Euro zone deflation and today’s French credit rating cut underscore the task ahead for the ECB, butnear-term direction will be driven by US Payroll numbers. It will be difficult for the Euro to climb back above the135.00 level this morning even with poor US data, but it would likely take some blockbuster Payroll numbers toput the Euro back on the defensive later today. The December Euro may find early resistance around the 134.42level, but may need to see strong data points from the Euro zone to fully recover from yesterday’s post-ECBmeeting meltdown.
Technical Outlook
EUR (DEC): The market back below the 60-day moving average suggests the longer-term trendcould be turning down. Momentum studies are still bearish but are now at oversold levels and will tend to supportreversal action if it occurs. The close below the 9-day moving average is a negative short-term indicator for trend.There could be some early pressure today given the market’s negative setup with the close below the 2nd swingsupport. The next downside target is 131.8100. The market is approaching oversold levels on an RSI readingunder 30. The next area of resistance is around 135.4000 and 136.5300, while 1st support hits today at 133.0400and below there at 131.8100.