The euro made a half hearted attempt to rally back to the 1.1700 figure, but the move was stymied by less than stellar Euro-zone Industrial Production data which actually contracted -0.4% versus expectations of a rise of 0.5%. The decline was a substantial disappointment with 1.9% month over month drop in the production of consumer durables contributing heavily to the shortfall. However, despite the lackluster results the EUR/USD hardly wavered from its pre-release levels as the pair is so grossly oversold now, that only drastically bad news will likely drive it further down. That dynamic was in evidence yesterday, as the unit barely buckled after a blowout TICS number of a more $100 Billion surplus which should have been highly bullish for the dollar but failed to move the pair to new lows.

No doubt the process of bottom fishing in the EUR/USD is still akin to catching falling knives, especially with today's US Industrial Production data expected to rise to 1% vs. 0.4% the month prior. Nevertheless, the EZ IP results are rather dated as they represent activity in September when oil prices and euro exchange rates were materially higher. With several analysts pointing out that the October PMI survey showed an expansion, the market may well shrug off tonight's report preferring instead to focus on the possible interest rate hikes at  December's ECB meeting. Our proprietary positioning index shows an almost dead even book between longs and shorts, reiterating the point that the FX market appears to be a standstill.

Boris Schlossberg is a Senior Currency Strategist at FXCM.