A cascade of sell orders pushed the euro to within a whisker of the 1.1700 level in Asian trade today, but the currency found a bit of support at that figure and staged a mild rebound throughout the European session. On one the quietest calendar days of the year with no significant economic data emanating from any of the world's major financial centers, the EUR/USD traded mainly off technical and political considerations with  market participants still unnerved by the scope and scale of violence in France. However, the imposition of curfew by the government of French Prime Minister Dominique de Villepin may finally be having a calming effect on the rioting. Reuters reports that, "The nightly protests against racism and unemployment dropped markedly in the greater Paris region, where violence had escalated to the point of shooting at police, but continued unabated in other parts of France, a ministry statement showed."

If the political upheaval in France subsides, market's attention may once again turn to economic matters. To that end the US Trade Balance report due 13:30 GMT Thursday will loom ominously over the greenback, especially if the deficit prints materially greater than the -$60 Billion  reading.  With euro so grossly oversold, having taking out multi-year support in a matter of days, a slight rebound would not be unreasonable at this time. However, with so much technical damage done to the pair it is far too premature to call a bottom.

The USD/JPY however, may be another matter. Having squeezed out even the most ardent shorts from their positions yesterday after reaching 118.40,  the pair appears to have reached a point of temporary respite. As oil prices remained below the $60 handle for the second day in row, yen found underlying support from the easing of the costs of crude. Tomorrow the market will see the results of the Eco Watchers Survey which has been unerringly accurate in gauging the strength of the Japanese economy. Should that number remain comfortably above the 50 boom/bust level USD/JPY may head back to the 117.00 figure as yen's retrace begins in earnest.

Boris Schlossberg is a Senior Currency Strategist at FXCM.