While EU ministers continue to argue against the deflation threat overnight in the headlines, German 4thquarter GDP results seemed to keep the threat of deflation in place, with domestic consumption in the EU’slargest economy remaining somewhat anemic. While we think upside momentum in the Euro is waning, wesuspect that the Euro might be able to temporarily benefit from a string of potentially weak US scheduled datapoints later this morning. Pushed into the market this morning, aggressive traders might look to buy the MarchEuro on a dip to 1.3730 looking for a very limited upside target of 1.3780.
Technical Outlook: Studies are showing positive momentum but are now in overbought territory, so somecaution is warranted. A positive signal for trend short-term was given on a close over the 9-bar moving average.The market could take on a defensive posture with the daily closing price reversal down. It is a slightly negativeindicator that the close was under the swing pivot. The next upside target is 138.0225. The next area ofresistance is around 137.6650 and 138.0225, while 1st support hits today at 137.0150 and below there at136.7225.