The euro struggled to make any headway against the US dollar this morning as confidence in the euro region slowly begins to slip. German exports declined by 1.5% in July when expectations were for exports to remain unchanged at 3.7%. Coupled with yesterday’s decline in German factory orders, it does suggest that Europe’s largest economy is beginning to cool and may continue to slow next year in the face of fiscal consolidation. Rising bond yields on Irish and Portuguese debt also point to investor nervousness surrounding the peripheral European nations which is weighing on the euro. The euro is weaker against sterling today and at record lows against the Australian dollar. However, losses against the US dollar may be limited if the US economy shows further signs of deterioration and investors begin to price in the likelihood that the Fed will move towards more quantitative easing. The Fed’s Beige book due for release later tonight will help shed more light on the health of the US economy with the details likely to be a factor on risk appetite going forward. In the meantime, expect movements in equity markets to have an impact on EUR/USD. David Choe, London