After an initial washout early this morning, the Euro has come bounding back perhaps because of slightlyhotter than expected Euro zone inflation data. As mentioned in Dollar coverage, German jobless readings were alittle better than expected and that should tip the macro-economic edge back in favor of the Euro bulls. Clearly theEuro is likely to see some temporary back and fill action in the face of the anticipated tapering statement, butweak US scheduled data earlier in the session probably puts the Euro back up toward this week’s highs. Remainshort term bullish toward the Euro, as long as it holds above 1.3814. On a rally back above 1.3930 look to getshort the June Euro.
Technical Outlook: The market back below the 40-day moving average suggests the longer-term trendcould be turning down. A crossover down in the daily stochastics is a bearish signal. Momentum studies trendinglower at mid-range should accelerate a move lower if support levels are taken out. The close below the 18-daymoving average is an indication the intermediate-term trend has turned down. The swing indicator gave amoderately negative reading with the close below the 1st support number. The next downside target is now at137.5125. The next area of resistance is around 138.4450 and 138.9725, while 1st support hits today at 137.7150and below there at 137.5125.