Euro undermined against dollar as ECB rate cut looks likely

The dollar strengthened against the euro on Friday on the view that the ECB will cut interest rates and announce quantitative easing measures at their next meeting on 2 April. The euro also weakened on the back of comments by German finance minister Peer Steinbrueck about the strength of the euro if 'fiscal responsibility is not taken more seriously in Europe.'

A fall in eurozone industrial orders in January and a weak performance on Wall Street on Friday also resulted in investors flocking to the safe haven of the dollar. US GDP data was not as dire as anticipated - it fell by an annual rate of 6.3% in the final quarter of last year, but this was still better than consensus forecasts from economists of a 6.6% fall.

This morning the dollar continued to strengthen against the euro. There are several announcements taking place in the eurozone today including Consumer Confidence, Economic Confidence and Industrial Confidence due to be released at 09.00 GMT. Additionally the ECB’s Trichet will be making a speech at 14.30 GMT. There are no significant announcements taking place in the US today.