While an overnight rally took the Euro to a fresh 5-week high last night, the market has given back a largeportion of early gains in front of today’s ECB meeting. Expectations are low that the ECB will cut rates further thismorning, particularly with a recent up tick in Euro zone inflation soothing deflation concerns. However, it will bethe post-meeting commentary of ECB President Draghi that could prove to be most hazardous to the Euro, asdovish guidance (particularly in regards to inflation) could end up weighing heavily on prices later this morning.With news headlines out of Greece already weighing on sentiment, the Euro needs to avoid any further damagefrom a more accommodative ECB today. The December Euro should find near-term support around the 135.75level, but clearly needs to get past the ECB’s post-meeting comments before reviving its current longer-termuptrend.
Technical Outlook: Daily stochastics have risen into overbought territory which will tend to support reversalaction if it occurs. The close above the 9-day moving average is a positive short-term indicator for trend. It is amildly bullish indicator that the market closed over the pivot swing number. The next upside target is 136.6225.The next area of resistance is around 136.3450 and 136.6225, while 1st support hits today at 135.5350 and belowthere at 135.0025.