The slack data from Europe continues to flow as does the lack of respect for the latest ECB stimulus effort. However, the Euro might be oversold and in need of a corrective bounce. In fact, with a hook up in openinterest and a steady rise in volume last week, the bull camp might have the capacity to temporarily regain a downtrend channel resistance line up at 1.2650. However, down trend channel resistance declines to 1.2593 byWednesday. For the time being, the macro-economic outlook for the Euro zone remains patently discouragingand traders need to sell rallies until there is a distinct headline shift. The Commitments of Traders Futures andOptions report as of September 30th for Euro showed Non-Commercial traders were net short 132,517 contracts,a decrease of 10,746 contracts. The Commercial traders were net long 180,759 contracts, a decrease of 12,653contracts. The Non-reportable traders were net short 48,241 contracts, a decrease of 1,908 contracts. Non-Commercial and Non-reportable combined traders held a net short position of 180,758 contracts. This representsa decrease of 12,654 contracts in the net short position held by these traders.
Technical Outlook: The market made a new contract low on the break. A crossover down in the dailystochastics is a bearish signal. Momentum studies are declining, but have fallen to oversold levels. The closebelow the 9-day moving average is a negative short-term indicator for trend. The defensive setup, with the closeunder the 2nd swing support, could cause some early weakness. The next downside target is now at 123.8275.More downside action may be limited by the RSI under 20 putting the market in extremely oversold territory. Thenext area of resistance is around 126.0550 and 127.2875, while 1st support hits today at 124.3250 and belowthere at 123.8275.