EURUSD: The pair continued its downside weakness the past week declining sharply through its 2010 low at 1.2520 and its 2009 low at 1.2456 to close lower at 1.2359 on Friday. That keeps it about 31 pips from its 2008 swing low at 1.2328. The question on every trader and analyst mind is will that level on the back of a break of the 1.2456 level succumb to further downside weakness? With the antecedent of that zone in 2008/2009 where it provided the platforms for rallies, a likely scenario might play out which should see the pair turning off that zone. This could generate a strong upside recovery towards the 1.2456 level and the 1.2520 level and even higher. That is one scenario. The second one will be an eventual break of that level (1.2328) pushing the pair further lower and targeting the 1.2121 level, its .50. Fib Ret (0.8225-1.6037 rally, monthly chart) and then the 1.2000 level, its big psycho level. All in all, while EUR retains is broader medium term downtrend and continues to weaken, it is now approaching a key level that may offer a massive support and turn it back up.
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