Friday’s collapse from multi-year highs may have rattled sentiment going into this week’s trading, but theEuro is clearly finding benefit from positive developments over the weekend. Comments by ECB President Draghithat there is no “immediate” need for Euro zone rate cuts may not be much of a surprise given the generallypositive tone of recent economic data from the region. However, a more than 1.5 cent pullback from last Friday’sspike high has spooked the market and could make it difficult for the Euro to make another strong upside moveheading into the end of this year. The March Euro may climb up towards the 137.88 level later this morning, andlooks to remain fairly well supported during today’s trading.
Technical Outlook: A new contract high was made on the rally. Momentum studies trending lower at midrangecould accelerate a price break if support levels are broken. The cross over and close above the 18-daymoving average is an indication the intermediate-term trend has turned positive. Since the close was above the2nd swing resistance number, the market’s posture is bullish and could see more upside follow-through early inthe session. The next downside target is 135.5900. The next area of resistance is around 138.4300 and139.7100, while 1st support hits today at 136.3700 and below there at 135.5900.