While German manufacturing results were positive, the Euro zone also saw a sharp year over year rise inretail sales and that has clearly increased the debate on what the ECB will do later this morning. With the BOJovernight expressing concern for deflationary pressures in the Euro zone, it would seem like some centralbankers are attempting to nudge the ECB to take action today. While no easing move from the ECB could resultin a short covering pulse up move in the Euro, we suspect the market could then severely punish the Euro zonecurrency because of fears that its recovery will seriously lag behind the US recovery without swift action from theECB. Pushed into the Euro today we would be a seller of a minor bounce to 1.3623.
Technical Outlook: The stochastics indicators are rising from oversold levels, which is bullish and shouldsupport higher prices. The market’s close below the 9-day moving average is an indication the short-term trendremains negative. It is a slightly negative indicator that the close was under the swing pivot. The near-term upsideobjective is at 136.5125. The next area of resistance is around 136.2050 and 136.5125, while 1st support hitstoday at 135.7750 and below there at 135.6525.