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EUR/USD Slumps as ECB Unsure About Future

August 30, 2011 by

EUR/USD dropped today as the comments of European Central Bank President Jean-Claude Trichet yesterday made traders believe that the ECB is going to pause its interest rates hikes. Today’s report about home prices, that turned out to be a little better than expected, drove the currency pair further down. The report about consumer confidence wasn’t dollar-friendly, though, and, consequently, the euro erased some of its losses.

S&P/Case-Shiller home price index fell to 140.76 in June from 140.84 in May. On year-over-year basis, the index declined 4.5%. That’s compared with the 4.6% drop in May and the median estimate of analysts of 4.7%. (Event A on the chart.)

Consumer confidence sank from 59.2 (revised from 59.5) in July to 44.5 in August, showing a much bigger decline than the expected move down to 52.1. (Event B on the chart.)

EUR/USD for 2011-08-30

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