While silence may have been golden for the Euro during the early part of this month, negative newsheadlines are putting it squarely on the defensive early this morning. Slovenia may not be one of the region’slarger economies, but comments from their central bank governor hinting that they may ask for a bailout has putperipheral EU debt problems back on the table. A key ECB policymaker has said that the ECB still has room tocut interest rates, which is adding further headwinds to the Euro this morning. Unless there is a substantialturnaround in global risk sentiment, the Euro will have trouble turning this selloff around. The December Euroshould find near-term support around the 135.10 area, and may be heading back towards the late Septemberlows during the next few sessions as the market starts to look beyond Washington for direction.
Technical Outlook
EUR (DEC): Daily stochastics turning lower from overbought levels is bearish and will tend toreinforce a downside break especially if near term support is penetrated. A positive signal for trend short-term wasgiven on a close over the 9-bar moving average. The daily closing price reversal down puts the market on thedefensive. It is a mildly bullish indicator that the market closed over the pivot swing number. The next downsidetarget is now at 135.3175. The next area of resistance is around 136.0550 and 136.3375, while 1st support hitstoday at 135.5450 and below there at 135.3175.