According to the forex markets lately, the answer to that is probably yes. The ECB has announced on Thursday that its benchmark policy rate remains unchanged at 1%, as was widely expected.

In the Conference that followed the announcement of the euro area interest rate, ECB President Trichet failed to supply any new strategy on how to contain the ongoing credit crisis with Greece, that is threatening to spread to other eurozone states as well. Investors were looking for any comments on outright sovereign bond purchases, or any other indication that would leave the door open for a looser monetary policy, and an overall more accommodative and supportive stance by the ECB. Mr Trichet failed to provide any news with respect to that, re-iterating the traditionally hawkish ECB stance that the ECB is completely inflexible on price stability issue, leaving little room for any extra measures to be taken to support euro zone debt stricken nations.

The ECB President did mention though, that moderate economic recovery was expected for the euro zone in 2010, but with a highly uncertain economic environment, and that default for Greece is not a likely outcome. However, traders apparently got no answers to the questions that they were interested in, and with no change in direction from the ECB, it is hard to make an argument for a reversal in the direction of the single area currency.

EURUSD dropped below $1.27, a 14 month low, after comments by Trichet about not considering bond purchases. Technically, the pair appears to be in a well shaped downtrend canal, when looking at hourly data. The MA(20) is below the MA(50), both declining, confirming the bearish set up. On the downside, a first support level might appear around 1.2650, whereas on the upside an initial resistance could appear around 1.2765, with 1.2800 in extension.