The euro is forging some impressive action this week and that is partially the result of corrective action in the Dollar and a lack of definitive deterioration in the Euro zone economic condition. Overnight European banks only availed themselves of half of the cheap funds offered from the ECB, which means there is some demand for loans, but that the banks aren’t facing severe balance sheet stresses. As in the Dollar, the Euro is also benefiting from ideas that the US won’t be able to raise rates as early as was feared and therefore the majority of the gains in the Euro are probably the result of a tempering of hawkish US Fed views and not because of any perceived improvement in Euro zone economics. In order to see a major bottom in the Euro probably requires a positive Russian/Ukraine settlement and or signs of recovery in the Euro zone economy off lower energy prices.
Technical Outlook: Momentum studies are trending higher from mid-range, which should support a move higher if resistance levels are penetrated. The cross over and close above the 18-day moving average is an indication the intermediate-term trend has turned positive. The market has a slightly positive tilt with the close over the swing pivot. The next upside target is 125.1575. The next area of resistance is around 124.9150 and 125.1575, while 1st support hits today at 124.0650 and below there at 123.4575.