A gap down failure on the Euro charts this morning is not surprising when one considers the wave of deflationary signals being seen in the marketplace this morning. The trade is not only concerned with the lingering political and financial uncertainty in Greece but they are also seeing signs of impending QE bond buying from the German central bank. While the Euro is also undermined by fresh weakness in the Russian currency, traders should be aware of a meeting in Berlin between key European leaders and Russian officials, as that could yield a thaw in relations that could decrease some of the headwinds buffeting the Euro zone economy. The next critical level on the Euro chart on the downside is seen at 1.1914 from the 2010 weekly spike low. For now, the fundamentals clearly leave the bear camp in control.
Technical Outlook: The market broke to a new contract low. Momentum studies are declining, but have fallen to oversold levels. A negative signal for trend short-term was given on a close under the 9-bar moving average. The close below the 2nd swing support number puts the market on the defensive. The next downside objective is 119.3150. The 9-day RSI under 30 indicates the market is approaching oversold levels. The next area of resistance is around 120.6200 and 121.3950, while 1st support hits today at 119.5800 and below there at
119.3150.