By Marc Chandler

The euro has been sold off in early North American activity. It does not appear to be news/event driven, but rather some weekend profit-taking that triggered some stops. We do note that many had targeted the $1.2700-$1.2750 objective. And there is a trend line drawn off of last November's high that intersects in that range today.

That said, there appears to be a head and shoulders bottoming pattern carved out in the euro. The down sloping neckline comes in near $1.2400 now, and violation of that would negate the pattern. The more immediate technical condition appears weak, with the euro having initially moved through yesterday's highs, making a new high for the move, and then breaking below yesterday's lows.

Stops now are thought to be below $1.2600, where some options structures have reportedly been struck. Hourly momentum studies are as overstretched as they have been this week, suggesting the odds may favor a bounce into the European close.
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