EUR/USD: Warsh Hawkish But Sees Housing Slowdown Impacting

The Fed's Warsh is on the tape with some quite hawkish remarks. He says there are clear upside risks to the inflation outlook and that inflation remains uncomfortably elevated. He does say that the sharp housing slowdown will impact the economy into 2007 but he sees it moving closer to its long-run potential. EUR/USD is edging to fresh session lows around 1.2800/03. EUR/USD was unable to overcome similar levels yesterday afternoon in New York. Small stops are seen just below 1.2800 but 1.2775 is expected to easily contain any downside today.