A very quiet night of trade in the currency market with both Europe and North America closed for Good Friday holiday. With little event risk on the calendar trading was dominated by stop running in Asia and short covering in Europe as the EUR/USD remains weak relative to the rest of G10 in the wake of comments by Jean Claude Trichet that rates may go lower and quantitative easing may begin.

A flurry of sell activity in early Asia trade sent the EUR/USD tumbling to a two month low as currency traders became increasingly concerned about the exposure of European financial institutions to the troubled assets in Eastern Europe. Last night Moody’s threatened to downgrade those European banks with large portfolio exposure to Central and Eastern Europe. According to Bloomberg, banks from Austria, Italy, France, Belgium, Germany and Sweden account for 84 percent of western European bank loans in Eastern Europe.