Sluggish inflation levels may not be much of a surprise after last month’s bleak Euro zone readings andlast week’s ECB rate cut, but today’s weak German CPI reading has kept modest pressure on the Euro headinginto this morning’s trading. Comments by several ECB board members that they have further room to cut rateshave added to the negative tone of the market, although prices have kept well inside of yesterday’s trading range.It may be difficult for the Euro to sustain any recovery without seeing near-term improvement from the region’seconomic data but as long as EU trouble-spots stay off the market’s radar, prices should hold their ground wellabove the overnight lows. The December Euro may find support around the 133.64 area later this morning, andwill be looking for fresh signs of growth in the region in order to generate upside momentum.
Technical Outlook
EUR (DEC): Daily stochastics are trending lower but have declined into oversold territory. Themarket’s short-term trend is negative as the close remains below the 9-day moving average. The market has aslightly positive tilt with the close over the swing pivot. The next downside target is now at 133.2550. The nextarea of resistance is around 134.4900 and 134.6950, while 1st support hits today at 133.7700 and below there at133.2550.