The Euro is modestly higher today on what has to be technical short covering as economic information from the Euro zone overnight left macro-economic slowing fears in place. Some traders might be fearful of upcoming COT positioning readings showing an excessive net spec short in the report after the close today. However, we would be surprised to see the Euro avoid weakness this morning in the wake of US payrolls unless the payroll gain provides a surprise with a reading below +220,000. In the event that US payrolls manage a rise in excess of +250,000 that could usher in a spike down exhaustion washout in the Euro and perhaps even a significant low. If the US economy is showing signs of sustained growth and the world is set to benefit from a 50% reduction in oil prices, one has to be careful in assuming the Euro zone won’t eventually benefit.
Technical Outlook: The market was pushed to a new contract low. The crossover up in the daily stochastics is a bullish signal. Daily momentum studies are on the rise from low levels and should accelerate a move higher on a push through the 1st swing resistance. The market’s short-term trend is negative as the close remains below the 9-day moving average. The swing indicator gave a moderately negative reading with the close below the 1st support number. The near-term upside objective is at 118.9625. Selling may soon dry up since the RSI is under 20 indicating the market is extremely oversold. The next area of resistance is around 118.4550 and 118.9625, while 1st support hits today at 117.5250 and below there at 117.1025.