EUR/USD has gotten a lift from comments from ECB vice president Papademos that inflation’s profile would likely be U shaped and that it would begin rising again in late 2009. As we saw today in German’s preliminary inflation figures, we are still in the disinflation stage at the moment, falling 0.2% over last month.
Higher inflation implies higher official rates and undercuts the talk earlier in the session of potentially larger doses of quantitative ease.
It is an open playing field between 1.3870 and 1.4000 given the intraday volatility today. We trade now at 1.3950.
