EUR/USD had a choppy day during the Thursday session as the market is starting to look like it's trying to find some type of support to bounce back from oversold conditions. This makes sense, as the market has been schizophrenic at best when it comes to the whole European situation. Quite frankly, the market hasn't punish the Europeans like it should have for this debt situation, going back and forth from focusing on European debt to the potential of quantitative easing.
There is open speculation that the Federal Reserve will increase quantitative easing soon, and as such the Dollar has been sold off a bit recently. The commodity currencies and general "risk on" trade has been picking up for the last couple of sessions and as such it would make sense that the Euro would get a bid.
Looking forward, a bounce will simply be treated as an opportunity to sell by larger money that tends to trade longer-term charts. The reason trading however doesn't exactly look strong and I suspect that any bounce will be sold off fairly quickly.
Bounce, and then sell.
To me, this market still looks extraordinarily weak and we could be laying the foundation for a "sell on the rally" type of move. Alternately, we could possibly see a breakdown from here which would be extremely bearish. I see the 1.2150 level as support, and if it gives way we could fall significantly.
Don't forget, there was a bearish flag that broke down a couple of weeks ago that suggested we were going to 1.15 in the long run. I still stand by that analysis, and suggest that every time we rally like this, we are simply looking for higher levels to sell from. Granted, there will be pops that are significant, but the fact is that the situation in Europe simply has not been fixed nor even attempted it being fixed truth be known.
It isn't in till we see a move above the 1.27 level that I would even consider buying this pair. There is a ton of noise between here and there, and I highly doubt that things will suddenly get better in Europe to the point where we break through all of it. My suspicion is that if we were about to make this type of move, you would understand it right away as it would be something monumental happening in the debt crisis. Because of this, I continue to sell the Euro every time it bounces.