Sluggish economic data has brought a dose of reality back to the Euro this morning as prices have takena large step back from the key 135.00 level. Although the market was able to shake off fairly dovish commentsfrom ECB officials during Wednesday’s trading, today’s weak GDP readings – particularly with French GDP slipping into negative territory – will be difficult to overcome in the wake of last week’s ECB rate cut. Peripheral EUproblem areas may be quiet for now, but weak inflation continues to cast a long shadow over the Euro this week.The December Euro may slide down towards the 134.14 level later this morning, and may have to rely on the”help” of dovish testimony from Janet Yellen later today in order to put the brakes on this current pullback.
Technical Outlook
EUR (DEC): The daily stochastics have crossed over up which is a bullish indication. Thestochastics indicators are rising from oversold levels, which is bullish and should support higher prices. Themarket’s close above the 9-day moving average suggests the short-term trend remains positive. The close overthe pivot swing is a somewhat positive setup. The near-term upside objective is at 135.2625. The next area ofresistance is around 134.9950 and 135.2625, while 1st support hits today at 134.1850 and below there at133.6425.