Hawkish ECB sends EUR/USD soaring
Written by Jamie Coleman
February 18, 2011 at 21:20 GMT

* ECB’s Bini-Smaghi: As economy recovers and inflationary pressures rise, rates may have to go up
* Egypt allows Iranian warships to transit Suez Canal
* Government buildings in Yemen torched by protesters
* US 10-year note rises 1 bp to 3.59%
* S&P 500 index rises 0.2% to 1343, fresh post-Lehman high

EUR/USD was given a turbo-charge by the newly hawkish Lorenzo Bini-Smaghi. His remarks sent EUR/USD through downtrend resistance drawn off the 1.3862 high from late January and through the 50% and 61.% retracements of the drop from that high to 1.3428. We also took out a barrier option on the way to 1.3715 highs, at the 1.3700 level.

USD/JPY slipped close to 83.00 with the dollar providing no safe-haven from turmoil in Yemen and Bahrain and the confirmation that Iran is moving warships to Syria. No doubt they will be delivering nothing but good wishes.

Cable rallied close to recent trend highs of 1.6277, reaching 1.6266. We end the session at 1.6242.

AUD/USD ends the week on a very firm note, consolidating gains near 1.0150. resistance drawn off the modern-era highs near 1.0250 comes in at 1.0175. A break should give the rally a fresh shot of adrenalin.

USD/CAD rebounded to close at 0.9865 from 0.9818 after oil lost $2 from the high posted after the Suez Canal story. WTI ends below $85 from 87.88 intraday highs.