[DanRath]

EURUSD: The correction down is looking serious and we are concerned that it may turn out to be more aggressive than we originally thought. A breach of 1.3113 will be a significant short term bearish development. While this does not change long term view that EURUSD can trend higher, it does suggest that more caution is required in the short term.

Yesterday’s high was the 76.4% Fibonacci retracement of the fall from the high on March 19th and was also the trend resistance that came from the high in Dec ’08. The short term price action is beginning to look concerning and we fear that that this correction down could go further than originally thought. While long term view of a higher EURUSD is still in place (over several weeks and months), a breach of the support level at 1.3113 would have to be considered a bearish short term development that would suggest a test of 1.2997 (55 dma) and possibly a fall back down to 1.2750-60 again.