Traders Edge 7-12-12- Something afoot in the currency markets?

The stock markets in the U.S. are set to open lower, tacking on more losses following yesterday's sell off that accompanied the release of Fed minutes- which lacked the signs of the monetary fix many traders were looking for.

We continue to believe that the market will be range bound, but would look for signs of increased volume to indicate any potential break out or break down.

We are witnessing an interesting setup in the currency markets.

The U.S. dollar, as exemplified by the PowerShares U.S. Dollar Index ETF (ticker UUP), cannot seem to get through the resistance set at the end of May. The last significant volume push came in May 15 and volume has been in decline since, indicating a lack of upside support in the most recent move. In addition, we note that a divergence has opened up and both the RSI and MACD are weakening. This is occurring while downside volume came into the UUP on 29th of June, indicating that the UUP may come back into the $22.40 range at the very least. 

As for the Euro, shown here as the Currency Shares Euro trust (ticker FXE)...

.... we are seeing a significant divergence in the price of the FXE and the RSI/MACD. This is while the price is in an oversold range. On a short-term basis, the sell-off since July 5 (and push below the May 31 low) has occurred on lower volumes. This is an interesting set up and may suggest that relief rally may be at hand for the beleaguered currency, this thought is tempered though by our belief that the debt problems in the Eurozone will persist.