the forex pro's at www.dailyfx.com say otherwise about your "idea" ... but stranger things have happened ... good luck to you if you are long the Euro -Euro â It seems like gravity has come back to haunt the EUR/USD as the currency pair gives back all of its November gains. The near vertical climb in the EUR/USD has now been met with a near vertical slide. The combination of stronger US data and a more conservative European Central Bank has given EUR/USD bulls good reason to bail out of their long trades. The highlight of this past week was the doubt that ECB President Trichet introduced into the markets about their plans to continue raising interest rates. Originally the market was expecting the central bank to raise interest rates in February, but now after his less hawkish comments on Thursday, that prediction has been pushed out to March. It also seems that this is the new message other ECB officials have been mandated to send to the markets as well. In order to avoid confusion, European central bank officials usually send one harmonious message to the markets when they give speeches which may explain why this morning Quaden said that low interest rates are good for the Eurozone growth. Garganas added later on that the ECB has done a good job of anchoring inflation. This is a shift away from their prior comments about inflation risks remaining high and their calls for more aggressive measures by the central bank. In the week ahead, like the US, there is a great deal of consumer price reports due for release. The other notable number that we are expecting is the ZEW survey of analyst sentiment. - * note ... I would prefer some more "USD weakness myself " so that the volatility continues in the metals I trade *
They just had their chance to hike -- when was the last time a central bank raised rates inbetween meetings that didn't involve defending a falling currency?
GBP momo should raise EUR with it indirectly. First half of the week European inflation numbers dominate, and second half US numbers. US numbers will come in tame, take away pressure from the bond market, with rates falling back down. USD bearish sentiment should close out the week. Europeans have been much more hawkish then their US counterparts. Its all relative I guess.