[Dan]

• Remain very concerned in the near-term that the pattern on EURUSD is very reminiscent if that posted in July last year (When we were very bullish EURUSD and got wrong-footed during the early stages of the down move). History has suggested being very careful of double tops on EURUSD on the topside and 76.4% pullbacks on the downside.

• What do we need to watch for now?



• The 200-day moving average has been very pivotal in the direction of EURUSD over the past 4+ years. It held above this average from April 2005 to August 2008 on a closing basis. After closing below in August 2008 it re-tested and held in Dec 2008 and eventually broke again this month. While it holds above this on a closing basis a re-test of the 1.3739 high still remains a possibility with such a development re-instating the positive bias. A close below, however, would be concerning-suggesting a false topside break and renewed downside potential. It presently stands at 1.3413 and in addition the 200 week moving average stands at 1.3431

• A break below both of these averages would suggest at least a danger of a deeper correction with the levels to be watched being
o 1.3083- the 76.4% pullback level of the 1.2885-1.3722 move
o 1.2885- the recent low and potential double-top neckline. A move below here would suggest much more serious implications as it would target not only the 2008 low but actually suggest lower lows close to 1.20

• While medium-term to longer-term view of a much higher EURUSD remains intact (Into late 2009/early 2010) these developments are of concern in the shorter-term (possibly 6-8 weeks) in that they could translate into another period of anti-risk USD strength.