The bull camp probably hoped that a jump in a January Euro zone PMI reading would have provided the Euro with some cushion. However, despite talk that lower oil prices is providing some benefit to consumers and the economy, the Euro remains under a cloud of anxiety into a transition of power following the Greek election on Sunday. Even talk that EU borrowing costs are poised to fall sharply has been discounted this morning and that highlights the lack of confidence in the latest easing effort and the Euro-zone in general. To find chart support in the Euro one might refer to the monthly charts and the late 2003 consolidation zone down at 1.1119!
Technical Outlook: The sell-off took the market to a new contract low. The daily stochastics gave a bearish indicator with a crossover down. Momentum studies are still bearish but are now at oversold levels and will tend to support reversal action if it occurs. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. The next downside target is 110.7125. Selling may soon dry up since the RSI is under 20
indicating the market is extremely oversold. The next area of resistance is around 115.1550 and 117.6525, while 1st support hits today at 111.6850 and below there at 110.7125.