EURUSD is moving higher in a choppy fashion today and in the process, is getting closer to the key 1.2623 level (low from January 13th 2012 and high from May 28th). I would expect to see sellers on the first test of this level.
Above that level the 38.2% of the move down from the May 1 high will be the next key upside target (at 1.26667).
The pair has a narrow trading range today at 66 pips so far. The average over the last 20 days has been 116. This suggests a further extension is certainly possible. If the upside momentum is to continue the price should keep the above the 1.25788-83 area. This is the high from earlier in the day, and the 38.2% of the days trading range. If the attempt higher stalls the earlier high at 1.2583 to 1.25788 will be eyed for support clues (see chart below). A move below the 100 and 200 bar MA (and trendline) at the 1.2569 should signal the go ahead for a test of the lows for the day(with t possible extension in that direction).
Completed Spanish auction and rates on Spanish debt is lower from the peaks last week, PBOC cut is helping the tone. Mr. Bernanke is up next when he testifies in Washington. The market will be looking for the Fed chair to signal that the Fed will extend Operation Twist. Much will be dependent on the headlines that will come out at 10 and what he has to say afterwards. The price will tell the story.
