The strong downside momentum that prevailed in the market on Tuesday breached any previous assumptions of a limited fall. The pair plunged 62 pips during the day and continued to move in the same direction early today, as well. The Greenback dashed through various support levels, but was stopped by the bottom boundary of a four-month descending channel near 109.80. This fall has sent technical indicators in the strongly bearish territory. This would suggest a possible period of appreciation up to the 110.50 area, especially if the US Dollar manages to surpass 110.30. However, such falls are occasionally followed by another plunge. In case this scenario occurs, the downside potential should not exceed the 109.50 mark where the weekly S2 is located.
