With a fresh new low for the move overnight the Euro is obviously out of favor and headed to lower levels. Unlike the Dollar which is showing signs of being overdone technically, the Euro has so many negativefundamental issues that it could be extremely difficult to alter the downward pattern. In addition to fresh Russiansanctions fears, the Euro is under pressure because of falling producer prices, which in turn are forcingeconomists to predict more deflationary pressure ahead for the Euro zone. Softer price results also increase theexpectations of stimulus from this week’s ECB meeting. While the rush into the Greenback overnight looks to beoverdone, the trend in the Dollar looks to remain up, especially against the Euro. The Commitments of TradersFutures and Options report as of August 26th for Euro showed Non-Commercial traders were net short 153,650contracts, an increase of 10,892 contracts. The Commercial traders were net long 198,007 contracts, an increaseof 3,412 contracts. The Non-reportable traders were net short 44,356 contracts, a decrease of 7,480 contracts.Non-Commercial and Non-reportable combined traders held a net short position of 198,006 contracts. Thisrepresents an increase of 3,412 contracts in the net short position held by these traders. Next support in theSeptember Euro is 1.3100 and then again down at 1.3050.
Technical Outlook: Daily stochastics declining into oversold territory suggest the selling may be drying upsoon. The market’s short-term trend is negative as the close remains below the 9-day moving average. Themarket’s close below the 1st swing support number suggests a moderately negative setup for today. The nextdownside objective is 130.9000. Some caution in pressing the downside is warranted with the RSI under 30. Thenext area of resistance is around 131.7400 and 132.1800, while 1st support hits today at 131.1000 and belowthere at 130.9000.