The Euro pushed higher in European trading on Tuesday with a peak close to 1.2680 before drifting weaker. Following the Australian interest rate decision, there was increased speculation that the ECB would resist an aggressive policy easing at their meeting on Thursday and this helped underpin the Euro. There was also speculation that an option position close to the 1.25 area was being defended, but buying support quickly faded.

The US economic data remained weak with pending home sales falling by a sharper than expected 7.7% for January after a revised 4.8% increase the previous month. Although the data refers to January, it will ensure continuing fears over the housing sector as it suggests sales will remain weak. The US currency continued to gain defensive support as fear dominated.

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