With EU officials promising the application of additional easing to cushion the Euro zone economy, it isdifficult to predict a halt in the downward spiral in the Euro currency. In fact, reports from Euro zone officials thatthe Euro zone has yet to see an export benefit from the decline in the Euro exchange rate, clearly suggests evenmore declines in the currency are needed. The next critical chart support level in the Euro is seen down at 1.2751versus the weekly charts and one can’t rule out an eventual return to 1.25 given the lack of positive economicnews flowing from the Euro zone.
Technical Outlook: The market was pushed to a new contract low. Daily stochastics are trending lower buthave declined into oversold territory. The close below the 9-day moving average is a negative short-term indicatorfor trend. The close below the 2nd swing support number puts the market on the defensive. The next downsideobjective is now at 127.1650. Some caution in pressing the downside is warranted with the RSI under 30. Thenext area of resistance is around 128.3200 and 128.9650, while 1st support hits today at 127.4200 and belowthere at 127.1650.