Having hit a low of 1.4033 intraday, the reversal in the EUR/USD was impressive. Although the price action may be largely due to the reasons listed in our USD Commentary, ECB President Trichet?s refusal to acknowledge the burden that a strong Euro is having on the region?s economy is still giving traders the green light to go long Euros.
Exporters and politicians are already screaming and we believe that it is only a matter of time before the ECB buckles as well. What they need is more confirmation that the economy is weakening and we may get a bit of that in next week?s economic reports. Germany, France and Italy are all releasing industrial production numbers and we are expecting German factory orders. There are also no less than eight ECB officials scheduled to speak which could provide some interesting fodder for trading.
[B]Written by Kathy Lien, Chief Currency Strategist for DailyFX.com[/B]