The Euro is technically oversold and pausing to determine if it has also become fundamentally oversold. With some sign of life seen in German Industry orders overnight and the ECB promising to provide some freshstimulus, we suspect that the slide of the last several weeks has factored in the threat of easing. However, for theEuro to turn probably requires some US economic doubt from an extremely active US report slate today andFriday. In order words, the Euro probably doesn’t have the internal news to reverse the entrenched downtrend,but a period of short covering could unfold if the dominance of the US economy is called into question. Shorts inthe Euro should implement profit stops at 1.3165.
Technical Outlook: The crossover up in the daily stochastics is a bullish signal. Rising from oversold levels,daily momentum studies would support higher prices, especially on a close above resistance. A negative signalfor trend short-term was given on a close under the 9-bar moving average. Market positioning is positive with theclose over the 1st swing resistance. The next upside target is 131.8300. The 9-day RSI under 30 indicates themarket is approaching oversold levels. The next area of resistance is around 131.6699 and 131.8300, while 1stsupport hits today at 131.2900 and below there at 131.0700.