Another lower low for the move in the Euro is not surprising in the wake of a definitive start to QE next week. The euro has discounted a jump up in Euro zone inflation expectations as a knee jerk reaction to the bond buying start next week. Another issue apparently discounted by the trade this morning is news that German Industrial output rose for the 5th straight session. Therefore just as the Dollar is priced for some form of perfection in its interest rate and macro-economic differential edge, the Euro appears to be factoring in no improvement from political or economic perspectives! The trend might be down but the bears should see risk of their positions rise in the weeks ahead.
Technical Outlook: The sell-off took the market to a new contract low. Daily stochastics are trending lower but have declined into oversold territory. The close below the 9-day moving average is a negative short-term indicator for trend. The market tilt is slightly negative with the close under the pivot. The next downside target is 109.1100. Selling may soon dry up since the RSI is under 20 indicating the market is extremely oversold. The next area of resistance is around 110.8999 and 111.6700, while 1st support hits today at 109.6200 and below there at 109.1100.