After seeing some choppy price action through the Euro zone data window, the Euro has regained itsfooting and is posting decent early gains this morning. While today’s “flash” PMI data underscored the wideninggap between German and French prospects, better than expected results from the Euro zone readings maysignal improvement from the peripheral EU that will help to underpin the Euro’s recovery rally early this week. Itmay be difficult for the Euro to sustain any move above the key 138.00 level without seeing some definitiveimprovement from the region’s “hard” data points, but a sluggish Dollar and stronger risk appetites should help tokeep the Euro relatively well supported this morning. The March Euro may rise up towards the 138.02 area latertoday, and even with positive surprises from US data it should still hold onto a large portion of this morning’s post-PMI gains. The Commitments of Traders Futures and Options report as of December 10th for Euro showed Non-Commercial traders were net long 15,115 contracts, an increase of 8,583 contracts. The Commercial traders werenet long 7,109 contracts, a decrease of 10,287 contracts. The Non-reportable traders were net short 22,224contracts, a decrease of 1,704 contracts. Non-Commercial and Non-reportable combined traders held a net shortposition of 7,109 contracts. This represents a decrease of 10,287 contracts in the net short position held by thesetraders.
Technical Outlook: Daily stochastics turning lower from overbought levels is bearish and will tend toreinforce a downside break especially if near term support is penetrated. The market’s close above the 9-daymoving average suggests the short-term trend remains positive. It is a slightly negative indicator that the closewas under the swing pivot. The next downside target is now at 136.7900. The next area of resistance is around137.6899 and 137.9899, while 1st support hits today at 137.0900 and below there at 136.7900.