The ECB came back to say it again after it has not been hear out from the ECB press conferences after its members meetings for determining the interest rate. The ECB president said that it is strong vigilance warranted to watch the prices which has not been said since 2008 when the prices were rising by the credit crisis and the Market Experiences is really priceless!

He added too that the bank sees the inflation will be from 1% to 2.4% next year which means that the ECB can enter new cycle of tightening its monetary policy for containing the prices to reach this while we have reached its ceiling up last months when the EU CPI reached 2.4% y/y.

The market has had the sentence as turning to tightening finally for containing the prices which have been fueled recently by the rising of commodities and energy prices with the tension in the middle East and specially Libya which is one of the most important and nearest oil and gas suppliers to Europe giving Italy 35% of its needs of gas.

The single currency has been pushed up by the comments heading for 1.4 psychological level again getting over its previous formed top at 1.386 versus the greenback and by god's will, this can open the way to 1.4281 which has been reached in the beginning of last November when the greenback was under pressure from the Fed's decision to add another 600b$ in another step of its QE policy for stimulating the economic growth in US and until now and as we have seen this week from Bernanke's testifies which have shown the Fed's existing worries about the jobs market and the need for supporting it and in the same time he has just mentioned the negative impact of the commodities and oil prices rising which can tackle the Fed's easing steps and US recovery hoping that to be temporary and well contained over the long term not even the medium term which is not looking good for the greenback or its interest rate outlook by God's will.

Kind Regards

FX Market Strategist
Walid Salah El Din