With another higher high this morning and the highest Euro exchange rate since January 24th, the Euro isclearly in vogue again. Surprisingly a weak German ZEW reading was of little consequence for the Euro, as itplowed higher despite ongoing talk of deflationary threats in the Euro zone. In the near term it would seem like thetrade thinks there is a greater risk of soft data from the US than from the Euro zone. It is also possible that theEuro is garnering the brunt of the windfall from the sharp setback backs in the Yen and Pound as the Chinesetightening move is thought to influence those currencies more than the Euro. While we don’t want to fight thetrend, fundamental justification for even more gains in the Euro ahead seems to be highly suspect especially withthe deflation fear still swirling in the background and the ECB seen as the central bank mostly likely to provideadditional stimulus. The Commitments of Traders Futures and Options report as of February 11th for Euroshowed Non-Commercial traders were net short 9,038 contracts, a decrease of 2,330 contracts. The Commercialtraders were net long 29,990 contracts, a decrease of 9,090 contracts. The Non-reportable traders were net short20,951 contracts, a decrease of 6,762 contracts. Non-Commercial and Non-reportable combined traders held anet short position of 29,989 contracts. This represents a decrease of 9,092 contracts in the net short position heldby these traders.
Technical Outlook: A positive indicator was given with the upside crossover of the 9 and 18 bar movingaverage. Momentum studies are trending higher but have entered overbought levels. A positive signal for trendshort-term was given on a close over the 9-bar moving average. With the close higher than the pivot swingnumber, the market is in a slightly bullish posture. The next upside target is 137.4075. The next area of resistanceis around 137.2250 and 137.4075, while 1st support hits today at 136.7950 and below there at 136.5475.