This week’s rebound in the Euro ran out of steam as prices have kept within a fairly tight range this morning. While a German survey of Consumer Confidence showed a better than expected gain, sluggish German Import and Export prices put weak Euro zone inflation levels back to a front and center position with the market. In addition, news that the new Greek government has frozen their nation’s privatization program has ramped up market anxiety that a potential confrontation with the “Troika” may be unavoidable. With Ukraine/Russian tensions also shadowing the market, the Euro clearly needs to see a dovish Fed shift in order to regain strong upside momentum. Near-term support is at 1.1335 early today, but a pullback towards Tuesday’s low would not be out of the question if the Fed maintains a hawkish stance this afternoon.
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. The market’s short-term trend is negative as the close remains below the 9-day moving average. The market setup is supportive for early gains with the close over the 1st swing resistance. The near-term upside objective is at 115.5475. The next area of resistance is around 114.8250 and 115.5475, while 1st support hits today at 112.8350 and below there at 111.5675.