As suggested in Dollar coverage this morning’s Euro zone data released overnight has tempered bearishattitudes toward the Euro which was clearly definitively bearish earlier this week. While we don’t think theIndustrial output results will markedly improve the Euro zone outlook, prices recently have not factored in anythingsupportive. Therefore one should not rule out a temporary recovery in the September Euro back up to 1.3539.However, for the bull camp to regain control will probably require the Euro to hold above the 1.3500 level throughthe 7:30 US data window. Seeing the Euro dip below 1.35 this morning probably means the US data was abearish surprise.
Technical Outlook: Daily stochastics are trending lower but have declined into oversold territory. Themarket’s short-term trend is negative as the close remains below the 9-day moving average. The market’s closebelow the pivot swing number is a mildly negative setup. The next downside objective is 134.9975. The next areaof resistance is around 135.4750 and 135.6975, while 1st support hits today at 135.1250 and below there at134.9975.