Yesterday’s headline for the EURUSD was “Slowly rising, signaling weakness”, and the Euro listened, and kept on falling from the weekly open, losing more than 130 pips from its Asian session high. And with this drop, the pair broke our support 1.2675 and dropped more than 40 pips below it so far. This break, even though did not have immediate results, will destroy the Euro on the short term, and probably harm it on the medium term as well. The reason we believe so is that, this break in specific is the single most important technical factor in classifying the rise from 1.2586 as purely corrective. Therefore, we expect the pair to lose ground, and start to drop with targets below last Tuesday’s bottom. Short term support is at 1.2643, and once it is broken we will target the same targets suggested yesterday: 1.2550 first then the all important 1.2432, which is critical for the medium term outlook. On the other hand, the resistance is at 1.2721, and breaking it would reverse the affect of the channel break. This is highly unexpected, but if it happens, the Euro will reject our negative outlook and target important Fibonacci levels at
1.2792 & 1.2871.

Support:

• 1.2643: important intraday level.

• 1.2550: the support area containing Jul 7th & 12th lows.

• 1.2432: Fibonacci 61.8% for the whole rise from 1.1875 to 1.3332.

Resistance:

• 1.2721: Fibonacci 61.8% for the drop from Friday’s top.

• 1.2792: Fibonacci 61.8% for the drop from 1.2920.

• 1.2871: Fibonacci 38.2% level for the drop from the 4-month high of 1.3332.