The September Euro continues to slide back from new 6-month highs this morning, as yesterday’s upside breakout may have been “too high, too fast” given the lack of fresh supportive EU news flow early this week. Signs of steady growth throughout the region are likely to keep the Euro in close proximity to these recent highs, but today’s negative turn in global risk sentiment is starting to weigh on prices this morning. The Euro’s other main pillar of support – quiet from the peripheral EU debt front – may be coming to a close as friction with Greece’s latest bailout tranche is starting to cast a long shadow over the market. The Euro is likely to face late headwinds if the FOMC meeting minutes revive near-term Fed tapering prospects but unless EU risk concerns start to flare-up again, the Euro is likely to remain relatively well supported during today’s session. The September Euro may pull back towards the 133.67 area late today, and should remain in close proximity to the recent highs in front of tomorrow’s Euro Zone “flash” PMI data.
Technical Outlook
EUR (SEP): Studies are showing positive momentum but are now in overbought territory, so some caution is warranted. The market’s short-term trend is positive on the close above the 9-day moving average. There could be more upside follow through since the market closed above the 2nd swing resistance. The nearterm upside target is at 135.3475. The next area of resistance is around 134.8650 and 135.3475, while 1st support hits today at 133.5750 and below there at 132.7675.