We would have thought EUR/USD would be trading a little lower given what has been happening to US yields this week. While there may be a tendency to conclude that long Dollars is a very crowded trade and this week's EUR/USD price action is telling, we think the defensive global environment makes it hard to own the pro-cyclical Euro. 

The Eurozone data calendar is exceptionally light today and barring some surge in US jobless claims or some surprisingly dovish Fedspeak, we would expect EUR/USD to be pressuring support at 1.0500. We would be careful, however, if we are under-estimating the risk of indiscriminate down-sizing of open (long Dollar) positions and would warn of a sharper correction higher should EUR/USD trade above 1.0600/0610 again.