The week has almost finished, with euro falling substantially against the dollar and the pound amid new developments in the ECB, where a split amongst members, including president Trichet, over the future of interest rates has threatened the currency€™s direction. The markets are already up for the day after Citigroup posted better than expected earnings and also economic data from US suggested that economy may be on the way to recovery some time soon.

The EUR/USD is trading much lower today and as we said yesterday the important support of 1.3130 did not manage to hold, hence the move below 1.31 since early on in the European session. The next level to watch is 1.30, which for now works as a psychological support level; however a clear break may indicate that the rally above 1.31 cannot be justified for now.

The economic calendar was almost empty today, with only consumer confidence for the US printing a better than expected number, giving investors some kind of relief and hope that the crisis may be starting to ease as President Obama indicated only a few days ago. Trichet provided the day€™s main talking point with his comments that the bank is ready to do everything it can to tackle the current economic crisis in the Euro zone. Market participants have been disappointed by the ECB lately, as their reluctance to clarify their position is giving investors jitters, who subsequently are not willing to go long with the euro for now, as the risk is too great.

The week has been interesting for global markets and at the moment there is an element of hope floating around, giving trader€™s confidence enough to go long in stocks and equities and short on the gold, as it starts to lose its lucrative status as an alternative asset to buy.

For now though, the situation is this; we are watching markets rallying with renewed confidence thanks to better economic data and investors eliminating the need to use safe haven assets, however that can easily change as the market is still fragile and the current advisable strategy is to follow the flow until signs of reversal commence. The euro looks very fragile and if 1.30 fails to hold, then further downside may occur towards 1.27 over the next coming weeks. The ECB holds the future of the single currency and if Mr. Trichet fails to convince us the bank is united on its decisions concerning the future, then the European currency will continue to feel traders' wrath€¦