As we have formerly expected, the single currency profit taken pressure could take over after the recent massive decline of the single currency waiting for this .5% widely expected cut with Trichet upgrading the inflation outlook in the Euro zone by mentioning that it will pick up in the second half of this year.

The next intermediate resistance is at 1.331 then 1.3475 then a major resistance at 1.375 getting above this can meet a stronger resistance at 1.382 whereas the recent fall beginning. The way down can face further difficulties at 1.3 psychological supporting level then the major support level at 1.284.

Trichet's comments could give the market a higher interest rate outlook of the interest rate in the euro zone as rises of the inflation upside risks in the second half were not discounted which can not leave the door open for further massive cuts giving the single currency a competitive mark versus the British pound and the greenback.

Trichet has mentioned that the ECB will take the necessary decisions in the face of the growth slow down of the European economy in the same time but reaching 0% interest rate level in the Euro zone has become less possible right now and there can be a closer ECB pause than what was expected.

Best wishes

FX Consultant

Walid Salah El Din

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