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EUR/USD. Uptrend broken

EUR/USD (1.2287) is down slightly overnight. It rallied a bit in Asian trading before selling off hard in the European morning. It is stabilizing coming into the US open. After failing at 1.25 Monday, spot slipped and has since stabilized. However, the lack of upward momentum has caused it to breach the recent uptrend.

Data release: Euro Zone industrial orders rose less than expected (0.9%, consensus 1.6%). Nonetheless, the EUR has managed to stabilize after selling off earlier in the European day.

Technicals:

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Trend: Daily higher; Weekly higher.
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Overbought/Oversold (stochastics): Daily neutral; Weekly oversold.
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Support / Resistance Levels: Support for EUR/USD lies at 1.2245 (Jun 23 low), 1.1877 (Jun7 low), 1.1827 (Mar’06 low), and 1.1640 (Nov’05 low). Resistance lies at 1.2487 (Jun21 high), 1.2672 (May 21 high), 1.3094 (May10 high), 1.3692 (Apr12 high), 1.3818 (Mar17 high), 1.4026 (Feb3 high), 1.4194 (Jan25 high), 1.4579 (Jan13 high) and 1.4626 (Nov low).

Positioning:

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The CFTC, EUR, non-commercial, net position (-55K) moderated sharply, consistent with the recent uptrend in EUR/USD. However, we’d caution that after the position moderated from a record +119K in May’07, EUR continued to strengthen from 1.35 to 1.60.
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The risk reversal (3m, 25delta) slipped overnight along with spot, but remains within its uptrend from the record low as the options market attempts to price in a rebound in spot.
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Implied Vol (3m) ticked up overnight but remains in a downtrend from the highs since Apr’09.

Cross-asset valuation: The significant correlations that EUR/USD has during the past 60 days are the 5yr yield spread (positive), the 10yr yield spread (positive), the US10yr yield (positive) and the SPX (positive).