Lukewarm inflation levels may be catching up to the Euro this morning, which continues to pull back fromWednesday’s failed retest of the 138.00 level. German Wholesale Prices showed improvement from their previousreading but still remain in negative territory, which may not bode well for some of the other “core” EU nations thathave been underperforming the German economy. With global risk appetites already dampened this morning, theEuro may have to rely on a sluggish US PPI reading in order to put the brakes on this current pullback. The MarchEuro should find decent support around the 136.96 level, and at this point needs to find positive news from the EUin order to fully regain the upside momentum seen earlier in the week.
Technical Outlook: A bearish signal was triggered on a crossover down in the daily stochastics.Momentum studies are trending lower from high levels which should accelerate a move lower on a break belowthe 1st swing support. A positive signal for trend short-term was given on a close over the 9-bar moving average.The close below the 1st swing support could weigh on the market. The next downside target is now at 136.9550.The next area of resistance is around 137.8599 and 138.2750, while 1st support hits today at 137.2000 and belowthere at 136.9550.