The December Euro has found moderate headwinds at the start of the new trading week, but is holding up fairly well given the amount of negative news headlines coming from that side of the Atlantic. Italian risk concerns have flared up over the weekend, not only from that nation’s political problems but also from the resignation of a major Italian bank CEO. A downtick in Euro zone inflation has also given the market some pause for thought as well, but today’s focus on events in Washington should help the Euro dodge any significant pressure. Risk aversion around the globe will clearly make it difficult for the Euro to regain upside momentum but unless Italian problems continue to escalate, prices should be able to hold their ground within this recent consolidation range. The December Euro may find near-term support around the 134.88 area, and will be hoping for a rebound in global risk appetites before the ECB meeting later this week. The Commitments of Traders Futures and Options report as of September 24th for Euro showed Non-Commercial traders were net long 66,359 contracts, an increase of 33,076 contracts. The Commercial traders were net short 63,764 contracts, an increase of 44,074 contracts. The Non-reportable traders were net short 2,595 contracts, a decrease of 10,997 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 63,764 contracts. This represents an increase of 44,073 contracts in the net long position held by these traders.
Technical Outlook
EUR (DEC): Momentum studies are trending higher but have entered overbought levels. A positive signal for trend short-term was given on a close over the 9-bar moving average. The market setup is supportive for early gains with the close over the 1st swing resistance. The near-term upside objective is at 136.1350. The next area of resistance is around 135.7000 and 136.1350, while 1st support hits today at 134.8000 and below there at 134.3350.