Euro Economy Inflation worring trades as they Buy Euros

ECB: In State of Heighted Alert
By Kathy Lien, Chief Strategist of DailyFX.com

Although the Euro has plunged close to 400 pips as the currency market turned its focus to the comments made by US officials, traders should not lose sight of hawkish comments that have also been made by the European Central Bank. According to ECB member Liikanen, the central bank is in a state of heightened alert. Along with central bank members Liebscher and Noyer, Liikanen stressed the need to contain inflationary pressures and how the rise in prices is making their jobs increasingly difficult. Unsurprisingly, German wholesale prices increased more than expected last month while industrial production beat expectations in France and Italy. Growth in the Eurozone has been steady, which is part of the reason why the ECB has felt comfortable enough to be exceedingly hawkish. However the simultaneous hawkishness of the ECB and the Federal Reserve is exactly what could keep the Euro to US Dollar currency exchange rates range bound for at least the next 24 hours.