The euro came off vis-Ã -vis the U.S. dollar today as the single currency tested bids around the US$ 1.4455 level and was capped around the $1.4605 level. Technically, todayâ€™s intraday low was right around the 76.4% retracement of the move from $1.4310 to $1.4920. The common currency continues to weaken on the premise the European Central Bank will be forced to shift its monetary policy bias this year from hawkish to neutral or dovish. Less-than-hawkish remarks from ECB member Mersch last week added to this view. The euro will likely continue to weaken as eurozone economic data continue to soften. German data released today saw December PPI fall 0.1% m/m, below forecasts for a 0.2% rise. ECB member Quaden today said the ECB is displeased with the current level of inflation but sees inflation receding to below 2.0% in 2009. In U.S. news, liquidity was reduced during the North American session today on account of the U.S. market holiday. Traders await existing home sales data on Thursday. Some economists are skeptical that the US$ 145 billion fiscal stimulus announced by the Bush administration last week can move through a Democratic-controlled Congress or will be sufficient to help the U.S. avert recession. Euro bids are cited around the US$ 1.4355 level.
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