EUR/USD reached 1.3328 after the Ifo index unexpectedly rose to 87.0 in January. The gains were short-lived however as traders quickly concluded that the first uptick in the index in eight months would not be sustained. prices pulled back, aided by comments from Ifo chief economist Nerb who opined that the ECB would cut rates in half to 1% this year.
Later in the morning, Belgium’s Quaden said that the ECB would probably cut rates further, helping undermine EUR/USD further.
Markets were supported early in the session by a Japanese plan to aid firms having trouble getting financing in this difficult environment.
EUR/USD pulled back as deeply as 1.3140 and is now consolidating at 1.3160.
