ECB's rate on hold at 4.25% with less hawkish statement from ECB, EUR/USD trimmed all of today’s gain.

[RTFX-Trading]

Starting the press conference talking about weak economic growth the ECB’s President Jean-Claude Trichet then turned to the inflation with a hawkish tone with warnings about the need to anchor price expectations stating the fact of the possibility of CPI remaining above target for sometime to come and the possibility that food and energy prices will continue higher. EUR/USD climbed to 1.5502 after that.

Then he spent more time than usual acknowledging the downside growth risk. He sounded the concern about the significantly weakening growth, just like everybody else. Trichet keeps pointing out that the ECB identified these downside risks continuously and now the fact is simply that they are happening. The less hawkish comments are not what the market was expecting and EUR/USD fell to a 7 week low of 1.5386.