Apparently Euro zone Services PMI data and German April Services data have given the Euro the upperhand over the Dollar again today. Apparently the Euro is also in favor because of bullish chart signals, as theovernight breakout seems to set the stage for a return to the March highs. We see little in the way of resistanceuntil the June Euro retests the March high of 1.3966. We would suggest that traders consider entering into anarrow bear put spread, by buying an at the money September Euro put and selling a one or two strike further outof the money September Euro put (see recommendation below). In the upcoming charge back to contract highs,we hope to liquidate the short put for a modest profit and hold the long put in hopes that the US economy regainseconomic pace in the weeks and months ahead.
Technical Outlook: Rising stochastics at overbought levels warrant some caution for bulls. The market’sclose above the 9-day moving average suggests the short-term trend remains positive. The close over the pivotswing is a somewhat positive setup. The next upside target is 138.9475. The next area of resistance is around138.8350 and 138.9475, while 1st support hits today at 138.6250 and below there at 138.5275.