Euro yields sit just above record lows into the upcoming ECB meeting which is widely expected to bring about QE. Clearly a portion of the trade is already anticipating disappointment from the central bank in its Thursday meeting. Most expectations call for a purchase program in the neighborhood of 500 billion Euro and without a program larger than that, we suspect that the euro will extend on the downside. Others suggest that regardless of the QE punch, the Euro is destined to slide as even lower exchange rates are needed to stir the Euro zone economy and overcome what appears to be an extension of the Russian sanction wet -blanket. Evidence of fresh Russian aggression toward the Ukraine extends the duration of sanctions and could eventually escalate the sanctions. We would be surprised to see the Euro avoid new lows for the move this week.
Technical Outlook: Daily momentum studies are on the rise from low levels and should accelerate a move higher on a push through the 1st swing resistance. A negative signal for trend short-term was given on a close under the 9-bar moving average. The market tilt is slightly negative with the close under the pivot. The next upside objective is 116.7650. With a reading under 20, the 9-day RSI indicates the market is extremely oversold. The next area of resistance is around 116.0700 and 116.7650, while 1st support hits today at 115.0700 and below
there at 114.7650.