The EURUSD closed last week (4 PM) at the 1.2292. That level was breached in the last hour or so of trading along with the trend line connecting the most recent lows from August 2 and August 10 (at the same level). The 38.2% of the move up from the July low comes in near the level at 1.2289 (see chart above). This will be close resistance in early NY trade today (aggresive sellers looking for the trend down to continue today will likely give it up to 1.2308 area – use the midpoint of the days range – see 5 minute chart below).
The range today is still a narrow 67 or so pips. This compares to the 20 day average of 120 pips suggesting a range extension is possible (new lows being made as I type). The next targets come in at trend line support from the July 24th and August 2nd lows at the 1.2250 and the 1.22417 which is the 50% of the move move up from the July low. This was also the low from last weeks trading on August 9th. I would expect buying to slow descents on the first test today. However, look for quick stops on a move below this level (the range for the day will only be around 100 pips at that point – still light compared to the 20 day average).
The bias is bearish. There is a lot of economic releases to get through with CPI, Empire Manufacturing at 8:30 AM. TIC Flows at 9 AM, Industustrial Production and Capacity Utilization at 9:15 AM and NAHB Housing Market at 10 AM. The bias off numbers seems to be stronger economy = QE3 put off and therefore lower EURUSD/higher dollar. Watch the technical levels above to dictate whether the downside bias remains today.