EUR USD (1.3320) The eurozone finance ministers meeting slated to discuss the fate of pan-European rescue vehicles starts on Friday.With the impact of Bernanke’s recent dovish statements now welldigested, it is not surprising that the news focus is shifting from the USeconomic data to the eurozone’s political economy. The trigger for thistrend was the ECB data released on Wednesday which showed thatdespite a total of €1 trillion liquidity injection by ECB, the flow of bank credits to the private sector decelerated in February. We reckon that it is still too early to interpret this data as disappointing. The banks likely took up the money since it was available, but lending activity can only accelerate if the liquidity also coincides with the investment plans of businesses. Much in the same vein a report suggesting that eurozone governments are preparing to increase the ceiling of the rescue aid to €940 billion, catered to an upswing for euro sentiment, particularly since the OECD had also recommended a firewall figure closer to one trillion euros. Subsequently however, the German governmentattempted to tame expectations by urging prudence about demandingever-higher firewalls. Despite all the rest of the noisy news about adeteriorating underlying situation in the periphery, the euro hasremained rather resilient. In a case of a modest dip to 1.3270, wewould embark on a bullish strategy with a risk-limit at 1.3230 and a price target at 1.3410.
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Deutsche Bank