The euro strengthened significantly to the dollar yesterday

The USD didn't feel in best spirits as the day continued though, except in USD/JPY at first. In EUR/USD the direction was clear and undisputedly up. The US consumer confidence number though could and should have been dollar supportive with a higher than expected reading. Even so its positive effects only worked through for a brief time span helping the pair down some 20 pips on the release, but then the pair again turned up and overtook the 1.19 mark. Fed chairman Greenspan's speech yesterday didn't bring any news on the rate front. For the longer term, the market's focus should still be on rate differentials and these should for the first time since long offer some better perspectives to the US currency.

ČSOB Investment Research