The Euro broke the support specified in yesterday's report 1.3173, and completely collapsed reaching both suggested targets 1.3113 & 1.3050. It even dropped more than 100 pips below our second target, dropping below the 1.30 for the first time since Apr 28th 2009. It was obvious, even before this recent drop, that the technical picture is negative, which we have expressed clearly in yesterday's report. But, the pace of this drop has exceeded our expectations. If we try to explain what happened, it could be a 5-wave drop which is still developing, out of which we are in the 3rd wave. And since wave 4 could be a sharp correction or a horizontal one, we must be extra cautious around here. We could see a sharp correction taking us back to the 1.31 area, before dropping below 1.29, or we could see a modest correction. Thus, we prefer to concentrate on the short term levels, and follow of break of any of them. The important levels for today are resistance 1.2985 & support 1.2948. If we break the support 1.2948, the price will continue dropping to the important levels in the 1.28 area: 1.2885 & 1.2820. But if we break the resistance 1.2985, the price will go back to trade inside the broken channel, and will start correcting yesterday's drop, targeting 1.3065 & 1.3130.

Support:
* 1.2948: important intraday support, protecting yesterday's low.

* 1.2885: Apr 22nd 2009 important low.

* 1.2820: Mar 10th 2009 high.

Resistance:

* 1.2985: the bottom of the channel which was broken yesterday.

* 1.3065: Fibonacci 38.2% for the short term.

* 1.3130: Fibonacci 61.8% for the short term.