A modest downside extension has taken the Euro below the key 1.3400 level this morning, which continues to find few positive readings from Euro zone economic data. While this morning’s Euro zone Sentimentreadings were a mixed bag, German CPI numbers hold little promise with showing any major improvement on theinflation front. Given the impact that Russian sanctions would have on European economies, the Euro’s best hopefor sustaining any recovery would come from consistent improvement with upcoming data points. There looks tobe some hope for a post-FOMC bounce this afternoon, but any rebound back towards the 1.3470 level or highershould be looked at as a selling opportunity.
Technical Outlook: Momentum studies are still bearish but are now at oversold levels and will tend tosupport reversal action if it occurs. The market’s short-term trend is negative as the close remains below the 9-day moving average. There could be some early pressure today given the market’s negative setup with the closebelow the 2nd swing support. The next downside target is now at 133.7725. Selling may soon dry up since theRSI is under 20 indicating the market is extremely oversold. The next area of resistance is around 134.3150 and134.5925, while 1st support hits today at 133.9050 and below there at 133.7725.