The Euro continues to see deflationary concerns surface and that sentiment leaves the bear camp incontrol. As suggested in Dollar coverage this morning, the Euro might be temporarily vulnerable, as the loomingFOMC meeting next week looks to generally leave additional US tapering fears in place until the Fed statement isreleased. In fact, with Davos commentary suggesting the prospect of more European LTRO’s and increasedeasing efforts in 2014, the path of least resistance in the Euro is expected to remain down. Countervailing thedownward tilt in the Euro is news that Euro zone debt declined for the first time since the sub-prime crisisemerged. On the other hand, uneven growth in the Euro zone and unusually high unemployment among youngerworkers leaves the prospect of additional and or ongoing easing from the ECB in the markets focus for now. Sellrallies in the March Euro to 1.3579 looking for a decline to 1.34.
Technical Outlook: Momentum studies are still bearish but are now at oversold levels and will tend tosupport reversal action if it occurs. A negative signal for trend short-term was given on a close under the 9-barmoving average. The close over the pivot swing is a somewhat positive setup. The next downside objective is134.9775. The next area of resistance is around 135.8650 and 136.0375, while 1st support hits today at 135.3350and below there at 134.9775.