The EUR/USD opened in Asia around 1.3625 after an extremely dull US session that saw the pairing trade in a 1.3616/34 range. This did not auger well for the Asian session where the EUR/USD tends to stay nailed inside the range of the previous session. Not surprisingly the range for the EUR/USD in Asia as of this writing has been 1.3616/33, but there have been pretty hefty EUR/JPY flows and they were mostly of a selling nature.
The cross fell from 168.15 to 167.70 before settling around 167.80 in the afternoon. The selling was mainly from Japanese security houses with US model funds joining in. The EUR/JPY selling gave the EUR/USD a heavy tone, but bids lined up around 1.3605 discouraged attempts lower.
Sentiment towards the EUR/USD remains bullish, but a correction lower in the EUR/JPY might be underway and this could temper EUR/USD gains. The key event today will be Bernanke's speech on inflation and some feel that he may be a bit more dovish than expected. If that is the case it could help the EUR/USD finally push through 1.3640 and challenge the all-time high around 1.3680/85.
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