The EURUSD is looking more neutral at the current level:

  • The price has taken three steps lower intraday.
  • The last leg was less than the other two although it broke below the support at the 38.2% at 1.25826
  • The next target at 1.2548-50 (50%  and 200 hour MA) was not tested (the low came in at 1.2566).
  • The correction off the last leg down moved back above the broken 1.25826 and the 61.8% of the legs move. 

As a result, the market is a bit more neutral at the current level.

Traders who were caught on Friday’s move have been given a bit of a reprieve via the correction lower. Ahead is the ECB meeting with the potential for more stimulus and other derivative solutions (perhaps?) from the EU.  The US data was not all that stellar today which helps neutralize conditions a bit as QE may start to come into focus.  Although QE effects on the dollar are not necessarily bearish, the initial Pavlovian reaction tends to be dollar bearish.  

Although traders short from above may rightfully wait for a move above the 1.2605 level before gettting  more concerned (38.2% of the days range as well as other resistance reasons – see chart below), there  may be more two way flows as the NY PM begins.