The Non-reportable Net Short position in the Euro has hit a new record level at 53,777 contracts and withthe added declines late last week we suspect the net spec short in the Euro is actually understated. While theBundesbank labeled the Germany economy as “robust”, they also warned that August German economic figurescould be disappointing and that seemed to give the green light for fresh selling of the Euro. The “Commitments ofTraders” Futures and Options report as of September 16th for the Euro showed Non-Commercial traders were netshort 141,258 contracts, a decrease of 18,196 contracts. The Commercial traders were net long 195,035contracts, a decrease of 16,737 contracts. The Non-reportable traders were net short 53,777 contracts, anincrease of 1,460 contracts. Non-Commercial and Non-reportable combined traders held a net short position of195,035 contracts. This represents a decrease of 16,736 contracts in the net short position held by these traders.Until the situation in Ukraine progresses toward an official “Peace” an end to the knock-on slowing influence inEurope might not be priced with a solid bottoming in the Euro.
Technical Outlook: The market was pushed to a new contract low. A bearish signal was triggered on acrossover down in the daily stochastics. Daily stochastics declining into oversold territory suggest the selling maybe drying up soon. The market’s short-term trend is negative as the close remains below the 9-day movingaverage. The market setup is somewhat negative with the close under the 1st swing support. The next downsideobjective is 127.6425. The 9-day RSI under 30 indicates the market is approaching oversold levels. The next areaof resistance is around 128.8850 and 129.6225, while 1st support hits today at 127.8950 and below there at127.6425.