More pain in the Euro as the trade all but discounted positive economic dialogue from ECB leadership overnight. Talk of forward progress in the Euro zone was tossed aside in favor of lingering hawkish expectations from various US Fed members. Until Euro zone data shows some definitive improvement or Putin backs down from the Ukraine it could be difficult to overcome the tide of selling in the Euro from the Dollar’s wake. At some point, selling the Euro off QE, low energy prices and ongoing recovery in the US, will be folly, but until the trade gets some respect for the Euro zone economy there is little to predict a low in the Euro.
Technical Outlook: The market was pushed to a new contract low. Momentum studies are still bearish but are now at oversold levels and will tend to support reversal action if it occurs. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. The next downside target is now at 105.7275. The 9- day RSI under 20 suggests the market is extremely oversold. The next area of resistance is around 107.7850 and 108.9875, while 1st support hits today at 106.1550 and below there at 105.7275.