The Euro just can’t seem to get together definitive evidence of recovery as Euro zone Industrial output for January declined by 0.1% but that negative headline was at least partially countervailed by suggestions from the Bundesbank that the German Economy should grow somewhat beyond normal capacity this year. Another limiting issue for the Euro is ongoing angst between Greece and the ECB, with Greek officials suggesting ECB policies are suffocating Greece. News that some EU officials don’t see Greece regaining market access by mid-year would seem to suggest no near term fixes are expected. Therefore even with the Euro extremely oversold, the most the Euro can hope for is a temporary corrective bounce as the fundamentals remain in the bear’s camp. Down trend channel resistance in the March Euro is seen up at 1.0894 today and that resistance falls down to 1.0845 on Friday.
Technical Outlook: 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. There could be some early pressure today given the market’s negative setup with the close below the 2nd swing support. The next downside target is now at 103.8625. With a reading under 20, the 9-day RSI indicates the market is extremely oversold. The next area of resistance is around 106.6350 and 108.0025, while 1st support hits today at 104.5650 and below there at 103.8625.