The Bulls failure, led by better than expected numbers from the U.S., was followed by another downwards correction posing questions about the Euro zone economy and their bank’s exposure to the credit markets.   Technically, today’s move touched the support zone of 1.5580 which is the 618.8 retracement from the June low and July high.   This price was also 76.4 fib fan retracement.   From here we could see a short term correction to 1.5670 where yesterday’s support was – now resistance.   For the bulls, this area is a cheap price because of 1.6000 psychologies.   The bears look to have made their presence known and would like to take control moving forward using 1.6 zone as the top.   The bulls need to hold above 1.5550 in order to keep control, as shown on the long term chart with the 1 year trend line (in bright pink).  

I should have been a little more specific yesterday as to how much the bears would go if there was a failure, sorry.   1.9800 – 1.9760 is a key support zone for the bulls to hang on to in order to warrant another push to 2.000 and above.   Now that today’s drop found its support we need to establish the bearish risk; 1.9845 looks like a good area.   Next support looks to be around 1.9650.  A fall from there could bring on 1.9400 again.

The inching in this pair has inklings of wanting to push through the historical resistance of 108.56.   Bears beware if 108.30 is removed!!!   The Bulls will be looking to take 110 as next target.  As far as support; 107.62 needs to be cleared to warrant a drop to 106.75 where more support will be found.   Keep an eye on the yen crosses in August.