A combination of short-term position squaring and dip buying is underpinning EUR/USD as it tests yesterday’s low of 1.2841.

So far it has bounced to 1.2863. Over the past few days USD strength has tended to peak around midday and then consolidate. If we see another failed dip lower without breaking 1.2841 that will be a sign for the US dollar bulls to close out positions for the day.

EURUSD 15 minute chart May 22, 2013

Overall, EUR/USD shorts might be the worst place to bet on US dollar strength at the moment. Over the past week, the US dollar is significantly higher against every major, except the euro. This might be a better place.