The euro surged to a five-month high as technical and fundamental factors combined to drive the dollar lower in late London trading. After the US consumer price inflation report came in on the soft side, euro/dollar rose within recent ranges. In later afternoon trading, as the euro rose towards previous resistance points, momentum gathered to help the single currency break through to USD1.1912, its highest level since June. However, by 1715, the single currency had slipped back a touch to USD1.886, while against sterling, it was up at STG0.6991.
Further catalysts for the brief breakthrough were a news story about the US Commerce Department considering new limits on imports of Chinese clothing, and a letter from Federal Reserve Chairman Alan Greenspan and Treasury Secretary John Snow urging Congress to clamp down on "misdeeds" by US mutual funds. Mutual fund concerns are the latest worries over US corporate governance practices, after investor confidence were shaken by major accounting scandals and conflicts of interest at US securities firms. //www.fxcentre.com