The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.5790 level and was supported around the $1.5740 level. Technically, today’s intraday low was right around the 61.8% retracement of the move from $1.6020 to $1.5280. Liquidity was reduced today on account of market holidays in the U.K. and U.S.


Traders will pay close attention to Germany’s consumer price inflation data scheduled to be released tomorrow followed by the flash EMU-15 May CPI rate on Friday. Some economists’ estimates suggest eurozone inflation may have reached 3.6% this month, up from 3.3% in April. A print this strong will all but force the European Central Bank to remain hawkish in its monetary policy stance. ECB’s Trichet was quoted as saying the various economic shocks the global economy has faced are “clearly not over.” ECB’s Gonzalez-Paramo reported eurozone banks have not become “addicted” to the ECB’s liquidity injections.


ECB Vice President Papademos reported “Indeed, the substantial and continuing increase in the price of oil has contributed to the deceleration in the rate of economic growth in the euro area. But, at the same time, it has intensified inflationary pressures," he added. "Inflation in the euro area, which reached 3.3% in April, is expected to remain at a level significantly higher than 2% for the subsequent months and will gradually moderate in the course of 2008.” Traders await U.S. new home sales and consumer confidence data tomorrow. Euro bids are cited around the US$ 1.5230 level