It will be interesting to see if the ECB has the –ahem– intestinal fortitude to begin tinkering with the terms of their long-term refinance agreements amid a flair-up in the global credit crisis. They had been laying the groundwork to back away from unlimited liquidity at a fixed 1% for the full one-year term of the operation.
Now, with the Dubai situation flaring up, the ECB may not want to tempt fate and stick with its super-easy policy until things settle down. That uncertainty is a EUR-negative near-term.
EUR/USD has dipped back to 1.4900 as the equities rebound stalls.