EUR/USD moves higher after Trichet comments

The EUR/USD has rallied post the Trichet comments. The only explanation is that he probably started to "get it" that inflation will not be a problem. That the economy is at risk and that sharp disinflation (if not deflation) might be a problem. And in a perverse way that is good for the EURO.

Having said that, the gains in the EUR/USD took the pair back up to the 1.3241 level which is coincidentally, or not coincidentally the 61.8% retracement level of the move up from the October low to the December high. This level has the markets attention and since then, the price has come back down. The pair and trading seems to be trying to figure out which way is best. We know the 1..3242 level on the topside. The bottom is defined by the low yesterday at 1.3093 and perhaps the low from Tuesday at 1.3139.

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