A minor dose of reality may have taken some of the steam out of the Euro’s rally this morning, as priceshave fallen back to the 138.00 area after reaching a new high for the move during the overnight session. Today’s”flash” PMI manufacturing readings for the Euro zone and Germany remain well above the key 50.0 level, butdisappointing numbers from the service sector and from France indicate there is still some ways to go before theregion can be seen as having robust growth levels. The Euro looks to have further upside left to go with Asiancentral banks moving away from the Dollar after this month’s events in Washington, but nearly 3 cents in gainssince October 16th could make the market vulnerable to a near-term pullback if risk aversion starts to gain furthercredence with global markets. The December Euro will find near-term support around the 137.84 area, and looksto maintain upside momentum as long as EU risk concerns continue to stay well off the market’s radar.
Technical Outlook
EUR (DEC): Rising stochastics at overbought levels warrant some caution for bulls. A positivesignal for trend short-term was given on a close over the 9-bar moving average. The close over the pivot swing isa somewhat positive setup. The near-term upside objective is at 138.2500. With a reading over 70, the 9-day RSIis approaching overbought levels. The next area of resistance is around 138.0299 and 138.2500, while 1stsupport hits today at 137.5100 and below there at 137.2100.