From a technical perspective, the EURUSD has been consolidating with the 100 hour MA (blue line in the chart above) attracting the sellers.
Both yesterday and today the price tried to move above this moving average level. However, each time the price got above, the move failed. The shorts remain in control. It can be as simple as that. The 100 hour MA is currently at 1.2561.
On the downside, the 1.2514 level was the low last Thursday. This area is providing an area to buy against for intraday traders (trading has the US holiday hangover with the UK holiday approaching this coming weekend). A move below obviously looks toward the low from last week.
Looking at the 5 minute chart, the intraday traders have been keeping a lid on the EURUSD using the 100 bar MA in the NY session. That level comes in at the 1.2540 level currently. Staying below this level keeps the sellers intraday. However, do not be surprised if a move above leads to a further wiggle higher with another test of the more important 100 hour MA level. With activity light, the little supply and demand imbalances control the intraday bias. Technical levels like this moving average can be the influence.
Longer term, the story remains the same. As Jamie points out the spreads to German debt continues to rise to record levels. The yields on Spanish bonds are breaking away to the upside (fear is increasing). The high weekly close came in at 6.699 at the end of November 2011. The train is moving and it is becoming harder and harder to stop.
