Trichet is often very clear when setting market expectations for future moves. Today, he has been far more opaque than in other instances when they shifted gears. The market is pricing in a cut next time nonetheless as he signals both a drop in inflation and a slowdown in economic growth.
EUR/USD has fallen as low as 1.3746 as barrier triggers at 1.3850, 1.3800 and 1.3750 have all been erased. Our target remains the 1.3665/80 region. Below that level, confidence in the euro will be rattled quite profoundly.
