The EURUSD has maintained in a range with 1.5040 basically acting as the midpoint over the last 5 hours.  As we move to the close the technical picture for the currency pair is quite weak. The EURUSD broke through the 5 1/2 month range  at the 1.5284 level and the 200 day moving average - this was the first break since March 2006. 

The catalyst was the Trichet comments yesterday.  Although still focused on inflation, he blinked in regard to the growth risks.  With oil coming down and growth slowing, the last piece that has to be resolved is the wage concessions for the unionized workers in the Eurozone.  If the economy goes into a recession, and the energy/commodity inflation surge is broken,  the choice between "should I work or demand higher wages" swings in the favor of "I'd rather work and be quiet.". 

The dollar is benefitting due to the fact that rates have already been cut and in theory, the US is better off.  The verdict may still be out with regard to that, but the focus is more on the Eurozone weakness at the moment and should remain there given the move in the EURUSD and the technical damage done. 

The EURUSD has next support at the 1.4967 level which was the first peak in EURUSD rates (reached in November 2007).  The longer term target comes in at the 1.4354 level which is the 38.2% retracement level of the last leg up in the EURUSD from the November 2005 low to the double top in April and July 2008.  

What must be remembered is the EURUSD has been in a bullish trend since October 2000.  The move took the pair from 0.8225 to the high of 1.6037.  This is a 95% appreciation.  The time is ripe for a correction as the focus goes global not just US.