Early European trading saw EUR/USD stuck in a 1.2620/30 band as the overnight failure to break above 1.2645 weighed. With solid offers once more tipped in the 1.2640's, back to 1.2650, dealers preferred to wait for a break above 1.2655 before entering further long positions.
This unwillingness to trade left the price adrift and ahead of the 11:00 London fix the pair was sold. The price eased and short-term players were noted selling for a return and retest of 1.2600 support. Yet hawkish ECB rhetoric and the speculation of 1.2600 strikes intraday aided the standing bids at the figure and 1.2600/50 now holds.
Looking ahead, there is no key US data set for release into the North American session. At 13:30 GMT the EU Monetary Affairs Commissioner, Almunia, is set to speak in Brussels but following this there is little other event-risk to shape pre-weekend activity.
As a result the focus is turning towards the US FOMC meeting, due next week. The fall in US inflation has seen the risk of a further hike from the Fed ease, however, with no cut on the table yet for early 2007 the Dollar remains modestly supported.
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