Euro falls while the consumer price is dropping to a lower level of expectations of Interest Rates

The euro has come under pressure following the consumer price report in September showing euro zone inflation fell for the fourth consecutive month, allowing the European Central Bank maintained.
Talking Points
• Japanese Yen: Testing The 20 day moving average Simple
• British Pound: Fisher said the flexibility Quantitative Impact Bearing
• Euro: Consumer Prices Fall for Fourth Month
• U.S. Dollar: earnings, CPI and manufacturing data front
Euro falls, while the consumer price is dropping to a lower level of expectations of Interest Rates
The euro has come under pressure following the consumer price report in September showing euro zone inflation fell for the fourth consecutive month, allowing the European Central Bank maintained. THE decline of 0.3% from a year ago in the headlines of the readings were unchanged from August but a decline to 1.2% from 1.3% in the central component is evidence that deflationary pressure continues. Indeed, during the month, prices were horizontal despite the expected increase of 0.1% as gains in food costs were offset by the decline in housing and energy. The European Central Bank monthly bulletin stated that it expected “low inflationary pressure” in the medium term.
A member of the Governing Council of the European Central Bank, Ivan Šrámka, was on the wires today saying that deflation is not a concern and that the euro zone economy could grow 1.0% in the third quarter. The European Central Bank forecasts a GDP drop of 3.8 to 4.4 percent this year and recover -0.5 to +0.9 percent in 2010. The lack of a threat of inflation has begun to expectations of low interest rate for the European Central Bank, which could be an important factor for the euro in the short term. The psychological level of 1.5000 may serve as a strong resistance level, but another bout of risk appetite could push the single currency to a higher level.
The pound was a major who showed strength against the dollar overnight, which was surprising since the basic data were zero for the largest economy in Europe. The support may come from the comments made by the European Central Bank board member, Paul Fisher, who declare that the efforts of quantitative flexibility were not actively sought the weakness of the pound. We could be seeing some short covering as the central bank forecasting adding to its shrunken assets purchase program. The trading GBP / USD is threatening the 50-day simple moving average at 1.6281 where it could find resistance.
The dollar held firm during the night and is showing signs of strength despite a positive stock market which saw the break above 10,000 yesterday.
Strong earnings have fueled the appetite for risk and Goldman Sachs and Citigroup reporting today that could get more of the same feeling which may weigh on the dollar. The first close above the psychological level for the blue chip index in more than one year may inspire investors to throw their hat into the fray that could lead to some irrational exuberance. The U.S. CPI figures must cross the wires and are expected to show that the risk of deflation is ending with the slowly declining rate for the second month to -1.4% from -1.5%. Regulators has remained slack in the economy sufficiently offset the increased risk, but the expected price increases 0.2% during September shortening the time of the future shake table. Later in the day traders must be conscious manufacturing readings for the regions of New York and Philadelphia which is expected to show decline in activity from the previous month which could derail the optimism and provide support to the dollar.

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