This morning’s upsurge may be running out of steam, but the Euro has seen a vast reversal of fortune asthe market has gone from threatening a downside breakout to challenging the early October highs in less than 18hours. A well-received Spanish bond auction this morning has been another positive development from theperipheral EU that helped the Euro maintain upside momentum early this morning. It may be difficult to see alarge-scale extension to this rally with the threat of potential ECB easing measures on the horizon but with nomajor Euro zone, German or French data points late this week to dampen market sentiment, the Euro is likely toremain well supported this morning. The December Euro may find stiff resistance at the 136.49 high from earlierthis month, but would need a fresh flare-up of EU risk concerns to lose any substantial portion of this morning’searly gains.
Technical Outlook
EUR (DEC): Momentum studies trending lower at mid-range should accelerate a move lower ifsupport levels are taken out. The market’s close below the 9-day moving average is an indication the short-termtrend remains negative. The daily closing price reversal up is a positive indicator that could support higher prices.The close over the pivot swing is a somewhat positive setup. The next downside objective is now at 134.3250.The next area of resistance is around 135.8200 and 136.2450, while 1st support hits today at 134.8600 and belowthere at 134.3250.