The EUR/USD continued its selloff on Tuesday as the S&P futures dipped below 700. However, the EUR/USD found support on our previous bottom-end support of 1.2458 early Wednesday.

Euro traders are holding onto their breath waiting to see if U. S. equities manage to stabilize from present levels. If this is the case, then 2008 lows could hold for the time being. However, if the U. S. economic data is catastrophic and a sharp selloff ensues, we very well may see the EUR/USD test the patience of October 2008 lows.

The biggest concern for the EUR/USD, not including U. S. equities, is the condition of Eastern Europe. Many of the EU's largest banks have significant exposure to Eastern European economies.

Therefore, if these economies worsen, the EU will find itself incredibly vulnerable. Meanwhile, the EUR/USD got a little good news today with its Final Services PMI coming in better than expected. However, the number still shows economic contraction.

Fundamentally, we maintain our support of 1.2458 with 2nd tier and bottom end resting at 1.2405 and 1.2344, respectively. To the topside, our 1.2514 and 1.2555 supports turn resistance while we hold our resistances of 1.2634 and 1.2690. The EUR/USD is currently exchanging at 1.2511.

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