One might have expected the Euro to have caught a lift overnight off an improvement in PMI figures but itis also possible that the short term technically oversold condition of the Euro is contributing to the bounce inprices. While the PMI readings were strong there is some evidence to suggest that reduced prices were neededto improve activity and for some that degrades the increase in activity. On the other hand, the Euro is potentiallyset to garner some additional benefit from disappointing US scheduled data but some of the weakness in US datahas already been assumed by the trade. An issue that might serve to limit the recovery in the Euro is talk thatStage III sanctions against Russia might be put in place at the end of this month!
Technical Outlook: Momentum studies are still bearish but are now at oversold levels and will tend tosupport reversal action if it occurs. The market’s close below the 9-day moving average is an indication the shorttermtrend remains negative. It is a slightly negative indicator that the close was lower than the pivot swingnumber. The next downside target is now at 134.4500. The 9-day RSI under 30 indicates the market isapproaching oversold levels. The next area of resistance is around 134.7399 and 134.8500, while 1st support hitstoday at 134.5400 and below there at 134.4500.