Market feels like its beating a dead horse

The law of diminishing returns seems to be at play. You can’t get any deader than dead, and traders see the US economy with a bad case of rigor mortis.

That said, we still can’t decide whether to trash the dollar across the board or to attack the JPY crosses on risk aversion. The Japanese planted some seeds of doubt yesterday by intimating intervention and further monetary ease may lay ahead and traders are beginning to view the collapsing Nikkei average as the catalyst that could spark BOJ intervention.

To me, the best idea near-term is to follow the central banks and sell rallies toward 1.2725 in EUR/USD with a stop in the 1.2765 area for a move back below 1.2600 level. A solid risk/reward proposition.