The Fed meeting and Greek drama might be the last stand for US dollar bulls
It's difficult to imagine a worse weekend for the euro and yet here we are, carving out new highs at 1.1290. EUR/USD is up nearly a cent from the start of US trading.
There's no squeeze in bond markets today. There's no particular mitigating factor and the only things weighing on the US dollar are some second-tier data in the form of the Empire Fed and industrial production.
If you're a US dollar bull, you have two bullets left
1) That Greece will default
2) That the Fed will come out guns-a-blazing on Wednesday and pour gasoline on a US dollar rally that has gone cold
Even if those two things happen, I wouldn't bet on a lasting euro decline.
If they don't, euro longs are looking awfully good. Four trips near 1.1400 have been rejected. In the process, euro shorts have remained surprisingly resilient. A fifth trip close to 1.14 will be the queue to buy in hopes of a big squeeze toward 1.20.
It's tough to see why the euro would rally, or how. But you can only ignore the signals from price action for so long.