The Euro dropped strongly, as it broke the support specified in yesterday’s report 1.2283, and successfully reached the first suggested target 1.2142, and a new cycle low(just as expected) at 1.2110, which is a level not seen since 2006! We expressed confidence in this scenario in yesterday’s report, when we said “we still believe that the drop to a new cycle low below 1.2142 is only a matter of time”. And even after this “dive”, we still believe that the Euro is ready to dive even more, and we still believe that the most important resistance is Fibonacci 61.8% at 1.2456! We do not see any reason to change our negative technical outlook for as long as the price is below it. And since that the price has touched the channel top, and came close to Fibonacci then it started to fall, then the negative outlook is still here, strongly! As for the short term the support is at 1.2200, and breaking it will drag the Euro to test this fresh cycle low 1.2110 again, and then to test the important psychological level 1.2000. The resistance is at 1.2279, which combines the top of the falling channel on the 4-hour chart (after adjusting it very slightly) and Fibonacci 61.8% for the drop from yesterday’s high. Breaking it indicates a continuation of the rising correction which will target 1.2390 first, then its ideal target: Fibonacci 61.8% at 1.2456. It goes without saying that this is the single most important resistance for the time being, and the separating point between a continuation of the current downtrend, and a reversal to an uptrend! We still believe that the drop to a new cycle low below 1.2110 is only a matter of time, nothing will change that except for a break of 1.2456.

Support:

• 1.2200: Fibonacci 61.8% for the short term, which was tested more than once during the Asian session.

• 1.2110: yesterday’s low, and the new cycle’s and 4-year low.

• 1.2000: important psychological level.

Resistance:

• 1.2279: the top of the rising channel on the hourly & 4-hour charts after adjusting it very slightly, and the short term Fibonacci 61.8% resistance.

• 1.2390: Fibonacci 50% for the drop from 1.2670.

• 1.2456: Fibonacci 61.8% for the drop from 1.2670.