The Euro has managed to reach back up to the highest level since September 24th overnight but theupward bias is challenged by another wave of slack German economic data. In fact, talk of a surprising washoutin German exports has kicked up talk of a return to recession, while other press reports are fretting over thepotential of a “frozen crisis” situation lingering on in the Ukraine. In other words a lack of progress toward a Peacedeal and the approach of winter in the Ukraine could increase the odds of Russia shutting off natural gas flow as away to increase their bargaining power. The Ukraine is already soliciting outside mediation on a natural gascontract with Russia that they say is asking for much above market rates. The Russians can argue that theUkraine is a bad credit risk because of their existing unpaid gas bills. We just can’t get behind the bull case in theEuro because of a temporary negative view toward the Dollar.
Technical Outlook: Momentum studies are trending higher from mid-range, which should support a movehigher if resistance levels are penetrated. The market’s close above the 9-day moving average suggests theshort-term trend remains positive. A positive setup occurred with the close over the 1st swing resistance. Thenear-term upside objective is at 128.4475. The next area of resistance is around 128.0750 and 128.4475, while1st support hits today at 126.8050 and below there at 125.9075.