FXstreret.com (Barcelona) - Dollar is dropping like a stone, and decline from Monday's high at 89.20 has extended on Early European session to levels below 88.00 to hit a fresh 10 month low at 87.55.

Below 88.00 (Oct 7 low), next support levels lie at, 87.25 (Dec 18 low) and below here, key support level at 87.10 Dec-Jan lows). On the upside above 88.00, resistance levels lie at 88.40, and above here, 88.65/80 (session high/previous lows), and 89.15/20 (Nov 20/23 highs).

According to Nicole Elliott, senior technical analyst at Mixuho Corporate Bank, the Dollar is heading to 87.00: We continue to wait for a serious downside test of key support at 87.00 (and then 85.00). The US dollar is not yet oversold and momentum is steadily bearish. One-month at-the-money imp-lied volatility is back down to the long term mean.