The Euro is holding right on the prior session’s lows this morning but the chart look isn’t overly supportive. An improvement in German Business confidence overnight, a soothing speech from Putin and a risk-on vibe in global equities provides the Euro with some cushion but there doesn’t appear to be a clearing of the deck of negative influences and we think that more lower-lows are ahead for the Euro in the coming trading sessions. In fact, a move by the SNB overnight toward negative interest rates simply highlights the need for the ECB to do something similarly aggressive to alter the pattern of slowing in the euro zone. Traders have to hope for a recovery to 1.2362 and perhaps to 1.2422 to get freshly short the Euro as any sign of strength in US data could restart the Dollar rally and the Euro slide.
Technical Outlook: The market back below the 40-day moving average suggests the longer-term trend could be turning down. Momentum studies are trending higher from mid-range, which should support a move higher if resistance levels are penetrated. The close under the 18-day moving average indicates the intermediateterm trend could be turning down. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. The near-term upside target is at 125.8125. The next area of resistance is around 124.4450 and 125.8125, while 1st support hits today at 122.4950 and below there at 121.9125.