The inability to hold above the 50 day moving average last week and the initial weakness this morningfavors the bear case. With somewhat slack Euro zone data overnight and technical damage on the charts againthat would seem to leave the March Euro poised for a slide down to up trend channel support down at 1.3535.That up trend channel support lines rises to 1.3541 on Tuesday. Seeing the Euro zone Services PMI forDecember come in softer than the prior month and softer than most expectations, leaves the fundamental tracknegative for the Euro into what is expected to be a string of positive US scheduled data points. Initial support isseen at 1.3598 and then again down at 1.3582. To turn the tide back in favor of the bull camp in the Euro, mightrequire a rally back above the 50 day moving average which comes in today at 1.3623.
Technical Outlook: The major trend has turned down with the cross over back below the 60-day movingaverage. Daily stochastics are trending lower but have declined into oversold territory. The market’s close belowthe 9-day moving average is an indication the short-term trend remains negative. The market’s close below the1st swing support number suggests a moderately negative setup for today. The next downside target is now at135.1850. The next area of resistance is around 136.3500 and 136.9850, while 1st support hits today at 135.4500and below there at 135.1850.