The EUR/USD pair had a negative day during the session on Wednesday. This really shouldn't be a huge surprise, as it is normally the Americans to step in and buy the Euro in general. With the Americans gone for the Independence Day holiday, there really was nobody left to buy it as the native traders tend to be the one to sell it.
There are two central bank monetary policy meetings coming up later today, and as such a lot of traders would be looking to take risk off the table. This would most certainly include the Euro, and the fact that it fell all the way down to 1.25 also suggest that there was no real volume were enthusiasm to the shorting of this currency.
However, it must be said that we have retraced most of the gains from last Friday. This suggests to me that the markets do not believe in the long term prospects of the European "solution and quote that was agreed upon during the last summit. This would be a surprise, after all is the 19th one and there's still a lack of details and more importantly - actual cash to backstop a lot of the endangered assets in the region.
Middle of the range
Although 1.25 held as support, I don't see it as the "ultimate support" underneath this pair. I think we are essentially in a downtrend and will see lower prices, but there is support to be found in the 1.24 region as well and this is the area that I would like to see broken before adding any short positions for the longer-term. With the ECB monetary statement coming out later today, we could expect very volatile marketplace for this currency pair. With this being said, it will be interesting to see what the reaction is at the end of the session.
.jpg "EURUSD Daily 7512")
We should remember that the nonfarm payroll announcement comes out on Friday, and that will move this pair as well. Because of that this should be a very volatile market, and may be best of we did over the next 48 hours. By the time the end of the Friday session comes, this market should have played its hand.