Now that European officials have expressed optimism off the benefits of a lower Euro exchange rate, it ispossible that the Euro move is now over extended. With Germany indicating they will not take on any fresh debtnext year, that provides some cushion to the Euro, which has been consistently pressured through layer afterlayer of chart support over the last 5 months. However, for the Euro to make a sustainable bottom, might requireevidence that the Ukraine cease-fire will indeed hold and perhaps that the latest wave of sanctions will beunwound. In short, the Euro is oversold technically, but a lot of fundamental issues remain in the bear’s camp.Critical support is seen today at 1.2880.
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. The close below the 1st swing support could weigh on the market. The nextdownside target is 128.3200. More downside action may be limited by the RSI under 20 putting the market inextremely oversold territory. The next area of resistance is around 129.3800 and 129.8800, while 1st support hitstoday at 128.6000 and below there at 128.3200.