The euro moved lower vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3120 level and was capped around the $1.3385 level. Traders reversed course and moved into U.S. dollar assets on optimism that the incoming Obama administration will be able to implement economic policies that improve the beleaguered U.S. economy. Also, the European Commission downgraded its GDP growth forecasts for 2009 and 2010 and now sees the eurozone economy contracting 1.9% this year and expanded 0.4% next year, compared with estimated 0.9% growth last year. The EC’s forecast is more pessimistic than the forecast of the European Central Bank which most recently estimated an economic contraction up to 1% this year. The EC also sees 2009 annual inflation around 1.0% and that could grow to 1.8% in 2010. European Central Bank President Trichet today reported 2009 will be very difficult, as I indicated last Thursday. The council of governors considers that world and European growth in 2009 will be substantially lower than the forecasts made at the beginning of December. He added The difficulties are still there, there is not in any circumstance any room for any complacency whatsoever. We must remain permanently ready to act. The ECB cut rates by 50bps last Thursday and ECB forecasts are expected to be updated in March. ECB member Provopoulos today said the scope for further rate cuts will be limited. ECB member Nowotny added The ECB has no interest in interest rates going down to zero. Euro bids are cited around the US$ 1.3055 level.