Although the Euro penetrated 1.3047 on Thursday, and jumped strongly, reaching the first suggested target 1.3145, it stopped there, and dropped from Friday high which was 1.3157, sharply. The importance of breaking 1.3047 comes from the fact that this level is Fibonacci 61.8% for the whole drop from 1.3332 which is a 4-month high, to 1.2586 which is a 2-month low. We have abandoned our negative outlook after the penetration of 1.3047, but it seems that the Euro has failed at the first serious test after that. The price has stopped at the retest level of the rising trend line from the June 7th low (please refer to the attached chart). Therefore, the technical outlook, even after penetrating 1.3047, is not strong enough to consider the Euro a “buy”, after failing in the retest. Short term resistance is at 1.3118, and only if broken will the Euro have another chance to rise. If it does break this level targets will be 1.3194 & 1.3306. On the other hand, the support is at 1.3060, and if broken, we will head towards the Fibonacci retracement levels for the whole rise from 1.2643 to Friday’s high. The first two of these levels are 1.2961 & 1.2900.

Support:

• 1.3056: the rising trend line from Friday’s low on intraday charts.

• 1.2961: Fibonacci 38.2% for the rise from 1.2643.

• 1.2900: Fibonacci 50% for the rise from 1.2643.

Resistance:

• 1.3118: Aug 5th low.

• 1.3194: Aug 2th high.

• 1.3306: Aug 9th high.