Earlier this week, the Forex Blog speculated that the tide was turning on the Euro, which had retreated from the $1.60 threshold. Sure enough, the month of April saw the best monthly performance by the Dollar in over two years. The sudden about-face by the Dollar stems from changes in interest rate expectations. Only a couple weeks ago, the consensus among investors was that the Fed would cut rates further at its next meeting; the only point of uncertainty was whether rates would be cut by 25 or 50 basis points.

As of today, however, there is only a 25% chance that the Fed will cut rates at all, if you go by futures prices. Regarding the Euro, investors are no longer so sure that the ECB will hike rates in response to surging inflation. In short, the new consensus is that the US/EU interest rate differential has stabilized. Then there is the economic picture; investors have “chosen” to be pleasantly surprised by the most recent economic data. While the economic downturn still seems inevitable, it may not be as severe as investors had previously feared. Reuters reports:

In contrast to slightly stronger U.S. data, the Ifo German business sentiment index this week showed the biggest monthly fall since September 2001.

Read More: «www.reuters.com»

LOS ANGELES: A Missouri woman was indicted Thursday for her alleged role in perpetrating a hoax on the online social network MySpace against a 13-year-old neighbor who committedsuicide. Lori Drew, 49, of suburban St. Louis, who allegedly helped create a MySpace account in the name of someone who did not exist to convince Megan Meier she was chatting with a 16-year-old boy named Josh Evans, was charged with conspiracy and fraudulently gaining access to someone elsescomputer. Megan hanged herself...