A huge range down extension in the Euro is justified in the wake of dismal economic readings fromFrance and Italy. Some might suggest that seeing Euro zone April CPI figures ring in at only +0.2% relative tohigher expectations for inflation in the US, has rekindled liquidation pressure in the Euro. With a more significantchart failure unfolding overnight and the Euro recently holding a non-commercial net spec and fund long of 31,000contracts, it is possible that long liquidation and outright fresh spec short interest is fueling the downsideextension. Near term downside targeting is 1.36 but the Euro might fall to that level quickly, if the US manages aUS CPI reading that is anywhere near the rather hot US PPI result seen yesterday.
Technical Outlook: The downside crossover of the 9 and 18 bar moving average is a negative signal. Dailystochastics are trending lower but have declined into oversold territory. The market’s close below the 9-daymoving average is an indication the short-term trend remains negative. It is a slightly negative indicator that theclose was under the swing pivot. The next downside objective is 136.8025. The next area of resistance is around137.2950 and 137.4625, while 1st support hits today at 136.9650 and below there at 136.8025.