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Forex pairs in this Article » EUR/USD (London) - EUR/USD is near flat on the day after undoing advances this afternoon’s session.

Low inflation gives current low rates room to run

On the EUR side of the coin, the final December Eurozone CPI reading showed inflation in line with earlier flash estimates. And in the low growth Eurozone, “not getting worse” is the new “getting better”. However, Jens Weidmann, head of the Bundesbank and ECB governing council member caused the greatest upside for the euro, talking down the threat of disinflation. However, he added that there was little sign of price pressure, meaning that the current low-interest ECB policies could be allowed to run.

"An ultra loose monetary policy is a therapy with risks and side effects. If cannot become a permanent therapy, especially as the positive effects are reduced over time, while the risks increase," said Weidmann,

US CPI data came in on line with expectations, rising 0.3 percent month-on-month in December bringing headline year-on-year inflation to 1.5 percent, still short of the Fed’s 2.0 percent target.

Lew calls kettle black

Bringing the inevitable and not entirely unwarranted accusations of hypocrisy, US Treasury Secretary Jack Lew spoke in Washington today, calling on Japan to “get their domestic economy growing” rather than relying on currency manipulation for economic advantage. Given that the US has hardly been Rothbardian in its attitude towards monetary policy and the use of the dollar to fight a currency war, the comments are unlikely to be given much time by Abe, Kuroda et al.

EUR/USD climbed to a session high of USD1.3647 after twice finding resistance at dips to USD1.3600. The pair then reverses gains, selling off to a current price, again troubling EUR1.3600 resistance near flat on the session.
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