This week’s moderate recovery in the Euro was firmly derailed as prices are showing sharp losses this morning. News that the EU Commission will postpone a decision on the budget plans of France, Italy and Belgium has not been taken well by the market, as it shows signs of kicking the can down the road on the region’s fiscal problems. It did not help that Italian Unemployment jumped above the 13% level as well this morning, well above market forecasts. Euro zone Unemployment and CPI readings were in-line, but an anemic 0.3% year-on-year
inflation reading will have the market looking for fresh ECB easing measures sooner rather than later. The $1.24 is looking more and more as a critical support level now, as the Euro zone clearly needs to see a positive change in tone for the Euro to regain upside momentum.
Technical Outlook: Positive momentum studies in the neutral zone will tend to reinforce higher price action. The intermediate trend could be turning up with the close back above the 18-day moving average. The close over the pivot swing is a somewhat positive setup. The near-term upside objective is at 125.8825. The next area of resistance is around 125.5350 and 125.8825, while 1st support hits today at 124.6450 and below there at 124.1025.