EUR/USD Fundamental Outlook at 1500 GMT (EST + 0500)

The euro moved marginally higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4415 level and was supported around the $1.4355 level.  Liquidity was light today as many market participants celebrating Boxing Day.  Most dealers expect greater liquidity overnight during the Australasian session with liquidity returning to normal next Monday, the first full trading day of the year.  Data released in the U.S. today saw the December Dallas Fed manufacturing activity index improve to 3.8% from the November reading of 0.3%.  Tomorrow's data will include the October CaseShiller home price index and December consumer confidence. On Wednesday, the December Chicago purchasing manager index will be released followed by Thursday's data releases of weekly initial jobless claims and continuing jobless claims.  The Federal Reserve today announced measures to absorb some of the US$ 1 trillion in excess reserves in the U.S. banking system.  The program would involve selling term deposits in which excess cash would be put aside, easing downward pressure on the federal funds rate.  The new program may be used in conjunction with the Fed's previously announced plan to conduct reverse repo operations.  Assets on the Fed's balance sheet were little changed at US$ 2.24 trillion in the latest week.  In eurozone news, European Central Bank President Trichet was on the tape reporting bloc members must reduce their budget deficits by 2011 and live up to their role of providing credit to the economy. Euro bids are cited around the US$ 1.3885 level.