A combination of residual Dollar weakness, slack US data and mostly upbeat Euro zone data leaves thepath of least resistance pointing upward in the Euro. Holding back the Euro is the prospect that Germany will takea leadership role in pushing sanctions against Russia and fears that Putin might decide to shut off natural gasflows to Ukraine rather than send in military forces. In the event that Russia selectively shuts down key energyexports that could hamstring portions of Europe at the same time that action slams the Russian economy.However, Putin is making the decisions and won’t be personally impacted by a severe slow-down in the Russianeconomy. We think buying the Euro is a high risk trade as a temporary window of safe haven interest might favorthe Yen and pressure the Euro. Critical support today is seen at 1.3825.
Technical Outlook: The crossover up in the daily stochastics is a bullish signal. Stochastics are at midrangebut trending higher, which should reinforce a move higher if resistance levels are taken out. The closeabove the 9-day moving average is a positive short-term indicator for trend. The daily closing price reversal up onthe daily chart is somewhat positive. The market has a slightly positive tilt with the close over the swing pivot. Thenext upside objective is 138.7475. The next area of resistance is around 138.5450 and 138.7475, while 1stsupport hits today at 138.0150 and below there at 137.6875.