Update: While this flyer is out in the wild, it does not confirm that it is actually happening. Microsoft has yet to make any announcements regarding the supposed cut. This article has been edited to reflect that.
According to Dutch retailer Bart Smit, the rumored price cut of the Euro Xbox 360 is happening. As previously speculated the Xbox 360 Elite has dropped from 549.95€ to 399.95€ , the Pro console (which includes Viva Pinata and Forza Motorsport 2) was lowered from 399.95€ to 299.95€ while the Arcade bundle is down from 279.95€ to 199.95€.
At 199.95€ the Xbox 360 Arcade would become the cheapest console of this generation in Europe, edging out the Nintendo Wii which retails for 249.95€. The Microsoft camp has stated that the key to better sales in 2008 is the European market, where Microsoft is forced to fend off the strong PlayStation brand awareness and the popularity of the Nintendo Wii. However, considering Xbox 360's popularity in the Western market we don't recommend North American buyers begin holding their breath for a price-drop just yet.
[Thanks, Sander D. Via WackaB]