The calendar was light yesterday and it only led to some confusion on what the next direction in the pair would be. The reason for the uncertainty and the confusion is the fact that much of the rise in the euro has happened during times of low volume. One major part of the rise happened during the last 2 weeks of December when the data and the liquidity is generally very low. There was not many fundamental factors driving the prices at that point of time and hence it was indeed a surprise that the dollar got so weak so quickly.
Likewise, the euro made another spurt higher at the beginning of the week when it was a holiday in the US. The move lower yesterday basically reversed the move from the beginning of the move and the move back higher took it to where it ended the day on Monday. Overall, the action has been pretty choppy making it a great couple of days of trading for the day trader while it has made the life difficult for those trading long term. We believe that the dollar weakness is here to stay and hence, any move lower in this pair for now, is likely to be met with buying and hence an opportunity to go long on this pair.
Looking ahead to the rest of the day, we do not have any major news from the US or Canada but we are likely to see the buoyancy in the euro and the weakness in the dollar continue for the next 24 hours. We could be looking at 1.23 and maybe 1.24 pretty soon.