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EUR/USD Drops Sharply After Rally

January 31, 2012 by

EUR/USD was rising today amid speculations that Greece made progress in talks about debt-swap, but the currency pair dropped sharply later. All fundamental reports from the United States were negative today, reducing appeal of the US currency.

S&P/Case-Shiller home price index fell from 138.39 in October to 137.52 in November. The index was down 3.7% on year-over-year basis, while analysts predicted a drop by 3.3%. The decline in October was 3.4%. (Event A on the chart.)

Chicago PMI dropped to 60.2 in January. That was a nasty surprise as market participants expected it to rise to 63.1 from the December figure of 62.5. (Event B on the chart.)

Consumer confidence also frustrated forecasters, falling from 64.8 in December to 61.1 in January, while an increase to 68.2 was predicted. (Event C on the chart.)

Yesterday, a report on personal income and spending was released, showing that incomes rose 0.5%, while spending was almost unchanged in December. Both increase 0.1% in the preceding month.

EUR/USD for 2012-01-31

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