The Euro faces a double edged sword today as the Euro zone economy clearly needs help to throw off apotential return to recession but that kind of action from the ECB is likely to yank the rug out from under the Euroagain. The trend is down and the ECB and Euro will have to take its medicine (significant easing) which initiallypushes the Euro into new lows for the move. In fact, seeing Euro zone producer prices in August contract againsimply highlights an environment where the Euro needs to move even lower until the exchange rate allows theEuro zone to borrow strength from its trading partners. Sell rallies of 20-30 points.
Technical Outlook: The stochastics indicators are rising from oversold levels, which is bullish and shouldsupport higher prices. The close below the 9-day moving average is a negative short-term indicator for trend. Themarket’s close below the pivot swing number is a mildly negative setup. The next upside objective is 126.7825.Selling may soon dry up since the RSI is under 20 indicating the market is extremely oversold. The next area ofresistance is around 126.5250 and 126.7825, while 1st support hits today at 125.9550 and below there at125.6425.