We stalled several times in the 1.2570/90 area in recent days so that will be an important area of support on pullbacks near-term. Expect intraday accounts to try and cover shorts on the approach of that level. Late comers who bought the breakout above the 100-day moving average and the 38.2% retracement may look to bail if we dip back below these levels, especially if Bernanke does not bring the thunder in his Jackson Hole speech.

Many expect a “QE3 friendly” speech, according to one bank, but a speech short on a specific time line. We already know that, so anything short of a signal for a September move will be a near-term disappointment. The dollar will rebound and the stock market will dip if he is opaque on QE3 timing.