Another higher high for the move and the highest trade since December 31st leaves the bull camp incontrol of the Euro. The market is close to filling a gap left in December and it might be difficult to arrest the rise inthe Euro until the next even number level of 1.38 is regained. Solid support in the Euro rises to 1.37 but the mainunderpin for the Euro is probably renewed concerns toward the US debt ceiling and the fact that US data thisweek seems to have reduced the odds of US tapering next week. We also think cheerleading from Davos hasadded to the Euro’s upward bias, as a series of EU leaders have been given a soap box to tout socializedeconomic prospects. The French Finance Minister suggested the government’s number one priority was jobs, butinstead of saying they would reduce the costs to employ people, he suggested there could be talks aboutrestrictive employment rules. However, the market isn’t currently looking at the actual macro economic differentialbetween the US and France and the markets also aren’t overly concerned that the EU remains in an easy moneystance, while the US is leaning toward an extraction of stimulus. More gains in the Euro based on technicalconsiderations and weak US data.
Technical Outlook: The market now above the 60-day moving average suggests the longer-term trend hasturned up. The daily stochastics gave a bullish indicator with a crossover up. Positive momentum studies in theneutral zone will tend to reinforce higher price action. The cross over and close above the 18-day moving averageindicates the intermediate-term trend has turned up. The outside day up is somewhat positive. The market’s closeabove the 2nd swing resistance number is a bullish indication. The next upside objective is 138.2400. The nextarea of resistance is around 137.7900 and 138.2400, while 1st support hits today at 136.0900 and below there at134.8400.