EUR/USD put in a rather lackluster show below 1.2500 this morning, discouraging dollar bulls. Considering we closed New York only slightly above 1.2500, however, we still favor downside continuation into tonight's start of the new currency day. New York is data-heavy tomorrow morning with the 8:30 a.m. ET CPI leading up to Mr Bernanke's report on the economy and Fed policy mid-day. The CPI will heavily watched as this morning's PPI came in stronger than some dollar bears would prefer. In reaction, spot gold was down 1.63%, while the 10- and 30-year bond yields finished up an impressive 1.2%, and 1.14%, respectively, hinting that an August Fed vacation is not a forgone conclusion.

With that being said, and considering EUR/USD's weak close, let's look to get short EUR/USD at 1.2525 and 35 with stops just above the 1.2560 highs. Look to take some back on a re-approach of the New York lows, building a little equity as the market chops at the lows.

There's a but here. I have a feeling that the dollar bulls might get tripped up above 1.2500 before our 1.2350 downtown target comes into play. Take a look at the 180-minute EUR/USD chart.  We're looking at a market that has traded straight down since 1.2780 without a single pullback greater than about 50 points. If we do bounce from 1.2500 and through our stops, measured move AB=CD comes into play at the former, and very significant, daily resistant uptrend channel in the inset chart at guess which price?! 1.2630. Does that sound familiar to anybody? It should, that was the spot where we got long before the market slid 120 points triggering an avalanche of â�,��"WHAT WERE YOU THINKING?!â�,� emails.  Even though it was painful to watch the market fall so hard and fast, we came away with some very useful information, if you were paying attention. A ton of traders were long a ton of EUR/USD above 1.2600 and got stopped out all the way down to 1.2500. The violent price dynamics told you the market was caught way off guard. So knowing this, any re-approach to 1.2600-20 will most likely be heavily sold into by any remaining longs who were not stopped, and delighted to be out closer to breakeven on the trade. Then of course, there are the sneaky longs, like us, who will be adding to the selling efforts. But first we have to get there.

Todd Gordon is a Technical Currency Strategist and Fund Trader with GAIN Capital Group.

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The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.