EUR/USD has drifted off toward the bottom end of the overnight range after an oddly firm reaction to appalling US economic data earlier today. Generally speaking, the dollar rises in times of economic stress and it falls in times of plenty. Today, stress is at the forefront.
If that drift to the downside extends, watch the 1.2825 area. We bounced hard on the approach of that level yesterday and risk sentiment will likely sour further if that level is cleared decisively. With the Spanish budget announcement due shortly, perhaps more austerity will be the catalyst for another round of long liquidation.
