The Euro wins the battle over the Aussie and New Zealand dollars!

Trichet spoke before Parliment early this morning and kept his "hawkish" tone up about fighting inflation, etc. He gave no indication of letting up or reducing interest rates.

This gave traders a license to buy up the euro once again. This lit a fire under it and it broke out of the recent sideways "tug of war" that it was having with both the Aussie dollar (EUR/AUD, left chart) and the New Zealand dollar (EUR/NZD right chart).

Click on the charts below to enlarge them.

So one thing is for sure. Both of these pairs will likely head higher out of this sideways consolidation as they are doing already.

Also, this tells us that EUR/USD should be even stronger at the moment than AUD/USD or NZD/USD since the euro is winning the battle against these commodity currencies.

So look for these euro crosses and EUR/USD to head higher over the near term until either the European data starts to soften or Trichet changes his language in his speeches.

(Don't forget that the central bank of Australia meets on April 1st to announce interest rates.)

Sean Hyman
Currency Director
The Sovereign Society