With investors anxiously awaiting the magic words from Trichet, the reaction was rather surprising to many.

In the press conference following the decision Trichet signaled the rate hike for July with the phrase strong vigilance and instantly spiked the euro higher.

Nevertheless, the euro surrendered the gains again and moved to fresh intraday lows of 1.4514 on fears over slowing growth and higher rates amid the debt woes. Trichet said that growth may slow in the second quarter and that inflation is to remain above 2.0% with upside risks.

The euro merely fell temporary in relief for the move as the currency was already moving higher on the bet for higher rates for the past two weeks and Trichet did not provide a stronger trigger for the euro to continue higher, especially as debt woes started to rise again.

Trichet reiterated his stance on Greece saying that privatization is a good way for Greece while that the ECB was against bonds restructuring or haircuts.

He stated that the full REFI operations remain valid at full allotment and will be adjusted as needed and the non-standard measures remain temporary in nature.

The euro is now supported by higher rates outlook and the currency can retrace now safely as the outlook is confirmed to return positive. The focus is on the correction and also on the ECOFIN meeting next week and the Greek crisis from where we expect the euro to maintain its upside potential and eyeing close $1.48 areas.