ECB comments could trigger a more substantial Euro correction, but will not be able to trigger a trend reversal in isolation

The Euro pushed to a new record high around 1.5270 against the dollar on Monday, but was unable to sustain the gains and dipped back to below 1.52.

There will continue to be fears over divergence within the individual Euro-zone economies, especially as the Spanish PMI index weakened to the lowest level for over six years. Spain and Italy are both at risk of recession in the near term and this will undermine confidence in the Euro-zone economy as a whole.

The Euro was pegged back by comments from ECB President Trichet who reiterated his strong backing for the US strong dollar policy. Euro Group head Juncker also stated that he was becoming increasingly concerned over the Euro while the IMF head called the currency overvalued.

A tougher official stance on the Euro would hamper attempts to secure further gains, although they will not be sufficient o trigger a significant reversal in the currency. The Euro stabilised around 1.5190 in Europe on Tuesday as depressed sentiment prevented more substantive dollar support.