The Euro probably dodged a bullet from the UK May manufacturing results overnight as the readingswere softer than expected. However, renewed strength in the Dollar off a revival of US rate hike prospects has leftthe Euro under pressure and in a pattern of lower highs on the charts. Another issue that is undermining theprospects of the Euro is the German import/export decline for the month of May. Pushed into the market we haveto favor the downside in the Euro as the macro-economic differential and interest rate differential edge favors thebear camp in the Euro. In fact, unless the September Euro manages to rise and close above 1.3615 we have toexpect a continuation of a lower high pattern.
Technical Outlook: Stochastics trending lower at midrange will tend to reinforce a move lower especially ifsupport levels are taken out. The market back below the 18-day moving average suggests the intermediate-termtrend could be turning down. It is a mildly bullish indicator that the market closed over the pivot swing number.The next downside target is 135.6725. The next area of resistance is around 136.2550 and 136.3725, while 1stsupport hits today at 135.9050 and below there at 135.6725.