The EUR/USD has fallen below all of our supports and our relatively flat medium-term uptrend.  Fortunately for the bulls, the EUR/USD has found temporary support just above February lows, preventing the currency pair from retesting 2008 lows for the time being. 

However, the EUR/USD is in dangerous territory, for if the currency pair should crash below 2008 lows, we could see a heightened near-term selloff.  Considering the S&P shares a positive correlation with the EUR/USD and the S&P has fallen below its own 2008 lows, then it is difficult to be positive on the EUR/USD trend wise. 

Germany’s 2nd largest bank, Commerzbank AG, posted significant losses today after its CEO said the bank may need to attain more cash to maintain operations in the futures.  Furthermore, France’s largest bank, BNP Paribas, dropped roughly 8% in European trading.  Eastern Europe continues its rapid contraction, harming all of the EU banks with significant exposure to the area.  Eastern Europe’s decline coupled with a faulting U.S. economy is a substantial reason for the Euro to depreciate against the Dollar since the ECB may need to increase the potency of its upcoming monetary shock. 

Fundamentally, we find support of 1.2555 with 2nd tier and bottom-end supports resting at 1.2514 and 1.2458, respectively.  To the topside, we see resistances of 1.2634, 1.2690, 1.2761, and 1.2822.  The EUR/USD is currently exchanging at 1.2605.

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