The EUR/USD continued to struggle to break the 1.47 level in Asian trade, following a strong upward move overnight and suggestions of an options barrier at that figure. A number of catalysts saw the euro bulls look to drive it higher against all G10 currencies, so it was hard to argue that it was simply a story of USD weakness. Comments from a Chinese official that stressed the risks of having concentrations of USD holdings in an environment of extremely accommodative policy helped to lift the pair, however these remarks were later withdrawn from a website and subsequently labelled as personal. Eurozone data was also strong and was perhaps the initial catalyst behind the rally with good prints on retail sales and German factory orders. In Asian trade, comments from New York Federal Reserve Chairman Bill Dudley caused a slight pullback to 1.4642 as risk was sold off; he suggested the US recovery remains distinctly subpar, while saying the Federal Reserve needs to closely monitor inflation expectations and that they are devoted to ‘keeping inflation in check’. The market continues to position itself for Thursday’s Central Bank meeting, and we expect Jean-Claude Trichet to adopt the use of ‘strong vigilance,’ thus signalling a July hike. However, given markets are pricing in around an 80-90% probability of this happening, the upside is limited. If Mr Trichet leaves it off unexpectedly, look for a repeat of the May sell-off with a move to below 1.45 expected. Chris Weston, Australia.