Traders should expect the ECB to continue to remain behind the curve with respect to stimulating their economy. History shows that the ECB can always be expected to act slower than necessary and in turn they usually disappoint market expectations. Some might call the ECB conservative but others might suggest that the central bank simply suffers from too many cooks in the kitchen. Like our Dollar prediction, we think the Euro is poised to see a big reaction to news over the coming 24 hours of trade, but in the Euro’s case, we expect a major
spike down washout, that puts the Euro into an extremely oversold condition. Our pick for a spike low is 1.2260.
Technical Outlook: The market made a new contract low on the break. A negative indicator was given with the downside crossover of the 9 and 18 bar moving average. Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The swing indicator gave a moderately negative reading with the close below the 1st support number. The next downside target is now at 122.3950. The next area of resistance is around 123.5700 and 124.1950, while 1st support hits today at 122.6700 and below there at 122.3950.