With U.S. markets closed for the 4th of July holiday, many of the major players in the currency markets were away from their trading desks. Low liquidity prevailed throughout the day as the dollar failed to make any significant move.
The EUR/USD dropped to a low of 1.2521 after trading as high as 1.2565. The USD/JPY was unchanged at 87.88. The GBP/USD fell to 1.5163 before closing at 1.5180.
The dollar was able to hold modest gains despite Friday's weaker than expected unemployment data. The U.S. reported Non-Farm Employment losses of 125k. Market expectations were for a loss of 110k jobs.
It appears the market is beginning to shift its focus from the fiscal issues in the euro zone to the struggling U.S. economic recovery. Economists worry of a potential double dip recession for the U.S. economy and a ballooning U.S. deficit. Today's data release of the ISM Non-Manufacturing PMI at 14:00 GMT may help to support or dispel the double dip theory.
The next support and resistance lines for the EUR/USD rest at 1.2470 and 1.2650 respectively. This resistance level also coincides with a 23.6% retracement level from the long term bearish trend that began in December of 2009.