The UK Prime Minister over the weekend warned of a return to recession in the Euro zone unless there is substantial central bank action to stimulate growth. Rising tensions in the Ukraine, Russian troop movements andreports of bird flu issues on the continent would seem to give the bear camp an edge in the Euro to start the newtrading week. Cushioning the Euro is somewhat better than expected growth data at the end of last week andreports of a record short non-reportable positioning in the Euro. The Commitments of Traders Futures andOptions report as of November 11th for Euro showed Non-Commercial traders were net short 162,216 contracts,a decrease of 7,502 contracts. The Commercial traders were net long 225,046 contracts, a decrease of 6,040contracts. The Non-reportable traders were net short 62,829 contracts, an increase of 1,460 contracts. Non-Commercial and Non-reportable combined traders held a net short position of 225,045 contracts. This representsa decrease of 6,042 contracts in the net short position held by these traders. With the rally at the end of last week,that should allow sellers of the Euro to enter at a safer level for what could easily be a return to consolidation lowsupport down at 1.2397.
Technical Outlook: Rising from oversold levels, daily momentum studies would support higher prices,especially on a close above resistance. The market’s short-term trend is positive on the close above the 9-daymoving average. The outside day up is a positive signal. Market positioning is positive with the close over the 1stswing resistance. The next upside target is 126.5250. Short-term indicators suggest buying pullbacks today. Thenext area of resistance is around 126.0500 and 126.5250, while 1st support hits today at 124.5500 and belowthere at 123.5250.