With a massive downside extension in the Euro overnight seen in the wake of unchanged jobless readings for the Euro zone and Germany, the trade is already calling for more action from the ECB and there islittle reason to suspect that the Euro will avoid more steep losses ahead. The market appears to have mostlydiscounted news of a distinct improvement in German retail sales for the month of August and that highlights theentrenched bearish psychology that is currently dominating the Euro trade. With the Euro also facing an extremelyactive US scheduled report slate and some of the data expected to be positive, the Euro might not find solidsupport until the 1.25 level.
Technical Outlook: The market made a new contract low on the break. Daily stochastics declining intooversold territory suggest the selling may be drying up soon. The close below the 9-day moving average is anegative short-term indicator for trend. The daily closing price reversal up is a positive indicator that could supporthigher prices. It is a slightly negative indicator that the close was under the swing pivot. The next downsideobjective is 126.4300. With a reading under 30, the 9-day RSI is approaching oversold levels. The next area ofresistance is around 127.2000 and 127.4700, while 1st support hits today at 126.6800 and below there at126.4300.