Into North American trading and EUR/USD continues to trade heavy inside the late European 1.3145/55 comfort band. Spot had been sold back in the European morning as dealers saw the Euro as slightly overvalued when you consider the risk that the ECB President may not allude to further rate hikes.
More bids are noted into 1.3130 but ahead of the 12:45 GMT verdict and flows are expected to be dominated by position squaring out of NY. The market remains braced for a 25bp hike from Trichet but it will be his accompanying statement (due after 13:30 GMT) that will be key to the direction of the Euro going forward. Should the path of normalization continue to walked then expect spot to remain supported while any further vigilance will see 1.3185/3200 retested with option barriers up at 1.3300 then coming back into view.
However, if Trichet has failed to don his hawkish suit then the Euro come under increased pressure and EUR/USD would look for a run towards 1.3130 and 1.3075 into the weekend. On the options front, decent sized maturities are noted up at 1.3375 & 1.3385.
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