Euro Approaching First Support Level to Test (1.28738) - 12/19/2011

EUR/USD is continuing its descent tonight after breaking below 1.32121/1.31460 last week. EUR/USD broke down after the EU summit statement lacked a "bazooka" and the European Central Bank (ECB) lowered rates and didn't mention plans to buy bonds. Actually, it officially broke down when Merkel rejected raising the lending limit for the ESM (European Stability Mechanism). Someone has to be trading in front of all of these releases. So now the euro is close to testing the first major support level of 1.287, or the 1/10/2011 low. EUR/USD needs to base out and break through that downtrend line from the October high on a bullish catalyst, or it risks crashing to 1.258 and possibly 1.187. If EUR/USD can break through that downtrend line, it will need to takeout the 1.315-1.32 ceiling (red line) to prove it has enough strength to hit higher trend lines (imo). It is currently trading at 1.30094.

EUR/USD 2010-2011 (source:

Related article: ECB's Draghi puts hopes on EFSF bailout fund, rules (Reuters). And on printing money, "Draghi also told The Financial Times in an interview that the ECB could not start printing money, adding that any country leaving the euro would be worse off and would still have to go through the same reforms."