Euro zone data overnight was a little weaker than expectations but with the readings still sittingcomfortably above the 50.0 growth/no growth line, the undershoot versus expectations is discounted. However,the question for Euro bulls is whether or not the Euro can withstand US data ahead that contributes to the”improving growth” bias that was started earlier this week. While the May slide in the Euro partially factored ineasing from the ECB in the Thursday’s meeting, we have to think that another downside probe will be seen in theevent they actually make a move. Unfortunately the ECB has historically disappointed the trade and hasconsistently put off taking action habitually. Pushed into the market we favor the downside because of the recenttrack of US data but we also think it is possible that the Euro could get hammered even if the ECB sits on itshands, as that could send a signal that the Euro recovery is going to lag behind the recovery in the US and theUK. Critical support is 1.3586 but we would remain bearish toward the Euro as long as it holds below 1.3650.
Technical Outlook: The stochastics indicators are rising from oversold levels, which is bullish and shouldsupport higher prices. The market’s short-term trend is positive on the close above the 9-day moving average.The upside closing price reversal on the daily chart is somewhat bullish. The market setup is supportive for earlygains with the close over the 1st swing resistance. The next upside objective is 136.8649. Short-term indicatorssuggest buying pullbacks today. The next area of resistance is around 136.6000 and 136.8649, while 1st supporthits today at 135.9600 and below there at 135.5850.