There have been few signs of let-up from the Euro this morning, as the market may be closing in onretesting the early February high for 2013 before week’s end. Washington’s budget drama has drawn focus awayfrom Italian budget problems and the difficulty with forming a German ruling coalition, but the Euro zone’sheadwinds are relatively minor compared to what the Dollar is facing across the Atlantic. It may difficult to justify avery strong Euro valuation with dovish commentary coming from the ECB and with low Euro zone inflation levels,but consistent signs of growth and improving risk appetites should help to keep the Euro relatively well supportedthis morning. The December Euro may climb up towards the 137.20 area later on in the session, but a large-scaleextension from these current price levels may require some positive news out of the Euro zone.
Technical Outlook
EUR (DEC): A bullish signal was given with an upside crossover of the daily stochastics. Positivemomentum studies in the neutral zone will tend to reinforce higher price action. The cross over and close abovethe 18-day moving average is an indication the intermediate-term trend has turned positive. Since the close wasabove the 2nd swing resistance number, the market’s posture is bullish and could see more upside follow-throughearly in the session. The near-term upside target is at 138.0675. The market is becoming somewhat overboughtnow that the RSI is over 70. The next area of resistance is around 137.6149 and 138.0675, while 1st support hitstoday at 135.9450 and below there at 134.7275.