With the latest QE plan to be released from the EU today the currency trade continues to embrace a widening of the US/Euro zone interest rate differential and that has ushered in another round of fresh lower lows in the Euro. Surprisingly the Euro saw almost no sustained support from the rate cut from Poland yesterday and it was also surprising that the Euro was also unable to benefit from positive economic readings from Germany earlier this week and it has also been unable to benefit this morning from news that the ECB was raising growth forecasts at the same time they were laying out their bond buying plans. As in the Dollar we see the potential for a major technical reversal following US payrolls on Friday.
Technical Outlook: The sell-off took the market to a new contract low. Momentum studies are declining, but have fallen to oversold levels. The market’s short-term trend is negative as the close remains below the 9-day moving average. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. The next downside target is 109.7800. With a reading under 30, the 9-day RSI is approaching oversold levels. The next area of resistance is around 111.4100 and 112.2600, while 1st support hits today at 110.1700 and below there at 109.7800.