The euro fell sharply vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.2715 level and was capped around the $1.2900 figure. The markets reacted mostly favourably to President Obama’s speech last night and are closely scrutinizing Federal Reserve Chairman Bernanke’s testimony before the U.S. House of Representatives this morning. Bernanke reported inflation is unlikely to be a problem over the next few years and dealers await details on the Fed’s upcoming new facility to stimulate consumer borrowing. The major question on traders’ minds deals with the possible nationalization of some major banks. Wall Street currently believes the Obama administration will revert to nationalization as a last resort, even after acquiring sizable minority equity positions in banks. The markets are currently focusing on the possibility the government will acquire a 40% stake in Citigroup. Data released in the U.S. today saw January existing home sales decline 5.3% to an annualized 4.49 million rate, nearly a twelve-year low. The median house price declined 14.8% y/y and these data were weaker-than-expected. In eurozone news, European Central Bank member Ordonez said the global recovery depends on the U.S.’s response to the crisis and said recent news and data have not been optimistic. Bank of Italy’s EuroCoin economic growth indicator for February fell to -0.63% in February from -0.21% in January, indicating the eurozone economy has worsened over the past month. Data released in Germany today saw Q4 GDP off 2.1% q/q. The European Central Bank is expected to reduce interest rates by 50bps in March. Euro bids are cited around the US$ 1.2475 level.