BBH on the dollar and euro

The dollar strengthened against European currencies and the opposite, however, unlikely this trend will continue. The market expects the ECB chairman Trichet's comments about a possible reduction in rate of refinancing and taking innovative measures at the next meeting. Trichet was in favor of reducing rates, but this reduction is more symbolic. The Central Bank has cut the key discount rate by 25 bp, as well as other major banks. In addition, among the members of the ECB is likely to have differences with regard to innovative measures, which the bank will announce at a meeting on May 7. The balance of the ECB has increased: to improve liquidity in the markets of the Bank was granted a huge number of loans. The next step could be the extension of the maturity of loans, rather than the introduction of new tools. It will also be listed on the inactive ECB compared to the United States. Meanwhile, the positioning is the key factor in the movement euro. Breakthrough psychologically important level of $ 1.30 will provide a further increase in euro. Momentum indicators show upward movement, so the euro quickly test the level of $ 1.30, than fall to $ 1.2900.