The financial market seemed to accept the fact that the financial system has changed dramatically. If anybody thought that the bullish session from last month was the end of hysteria, now we all know that it was just a sharp "short-squeeze". The US indices turned back falling this month, as NASDAQ shed 9%, Dow Jones lost 6% and this month is not over yet. Of course, the markets can suddenly rise again but this option is getting more and more unlikely after the massive downgrades of Hungary, Belgium and the rumors of a new rescue plan for Spain.
The fact that there is such a heavy cloud above the European economy gives no chance for the Euro to correct. In addition, the negative correlation between Wall Street and the USD is also contributing to the bears in this pair. On the beginning of the last week, the Euro stood up against the global trend but eventually it broke under 1.345 and it is on the way to 1.30. No doubt, that the pair needs to correct in some point, but putting this technical issue aside, the picture is not encouraging for the EUR. An inverted "Cup & Handle" pattern appears on the weekly chart, though there is not an accurate supporting line that can be marked as a trigger for a potential trade. Nevertheless, it looks like the current support is around 1.315-1.32 and a strong break-down there might take the Euro to 1.29, in which it has not visited since January this year.
The pair finally reached the resistance, which I have been following for several weeks (0.93). This level was obvious to many traders, who probably set their automatic orders there in case the USD breaks-through that resistance. However, the break-up might not go as smooth as everybody wants and the pair might correct down from this point. Because of that, I suggested the reversal system when the pair was traded around 0.915, which gave a safe-distance of 150 pips for those who wanted to buy the pair on the break-up. The recent significant low is the one at 0.908, though a break-down there will not necessary mean that the break-up has failed. A possible target for the current movement is 0.955-0.96.