Following an extremely oversold spec positioning in the last COT report, seeing a stronger than expected German ZEW result overnight combined with news that Euro zone car registrations posted a 14th straight monthof expansion, should increase the prospect of technical short covering in the Euro. In fact, if the US PPI readingsshow a contraction later this morning and the trade puts a more positive spin on impending ECB stimulus efforts,that could result in a return to and beyond the recent high in the December Euro of 1.2581.
Technical Outlook: Rising from oversold levels, daily momentum studies would support higher prices,especially on a close above resistance. The market’s close below the 9-day moving average is an indication theshort-term trend remains negative. The market could take on a defensive posture with the daily closing pricereversal down. It is a slightly negative indicator that the close was lower than the pivot swing number. The neartermupside target is at 126.1849. The next area of resistance is around 125.2200 and 126.1849, while 1stsupport hits today at 123.8800 and below there at 123.5050.