By Munther Marji on September 8, 2010 | More Posts By Munther Marji | Author's Website Euro Dollar The Euro fell heavily during yesterday’s Asian session, then it resumed the drop during the European session. After stopping just below the enormous resistance we talked about in Monday’s report 1.2920 (Monday’s high was 1.2916), we saw the Euro fall, breaking yesterday’s support 1.2777 and successfully reached the first suggested target at 1.2690. With this drop, the price has broken 3 critical levels at once: 1. the rising trend line from Aug 31st (which was broken at 1.2860), 2. the falling trend line from Sep 1st top and 3. the massive support at 1.2777. This has shifted the short & medium terms’ technical outlook to the negative territory! But on the other hand, after the big drop, chances of seeing a correction before resuming the journey south are massive. The ideal target area for a short term correction is from 1.2767 to 1.2824. Therefore, today’s best strategy may be selling if the price rebounds to this area. Short term resistance is at 1.2824, we do not expect it to be broken today. But if it is broken, we will jump to 1.2912 & 1.2972. Support is at 1.2698, and a break here would target 1.2627 and may be at a later time 1.2522. The Dollar/Yen dropped to 83.33, a new 15-year low! The latest drop came in the midst of the disappointment in the BoJ, which after a 2-day meeting, announced that it will not do anything at the moment to deal with the strong Yen. We have recently adjusted the falling trend line on the hourly chart to include Friday’s jump. We still believe in USD/JPY weakness, and we believe it will travel south. Only a break of this line in specific will change our minds. This line is currently running at 85.10 (please refer to the attached chart). To keep trading below it, indicates more downside activity, especially after the BoJ disappointed again yesterday, as the “Japs” said once again they are watching closely, but they did nothing! The market has had it with these comments, and now the Japanese authorities should buy tickets to the “Yen Show”, and see what it will do to the Dollar & the Euro! Short term support is at 83.41, and if broken, we will be on the way to our long-awaited target at 82.25, then we will see the psychological level at 80.00. On the other hand, the above mentioned trend line is at 85.10, and Fibonacci 61.8% short term is at 84.49. If the latter is broken, we will target former. And if this one is also broken, the Dollar will be violent to us all, as it will shoot up to 86.25.

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