Euro Consolidates Ahead of ECB – Will Trichet Offer Support?

A bit of profit taking in risk FX in both Asian and early European trade today after a sharp short covering rally pushed all the high beta currencies higher against the greenback yesterday. The sell off was most predominant in Asian trade as Shanghai stocks slipped more than -2% on fears of further tightening of credit and precipitated a risk aversion move in currencies that saw EUR/USD tumble to 1.3650 . USD/JPY declined to within striking distance of the 88.00 handle as yen continues to benefit from both repatriation flows and further pressure from EUR/JPY sales.