EUR/USD News at impact 10 ET 25-Jan 2010

Hi

Could someone explain why EUR/USD rapidly dropped after news were released. You would expect it to rise as the actual home sales value was lower than anticipated?????

I read in trading book relating to trend followers:

Price makes news.

News dont make price.

Since US $ is already in a bullish zone, it rose.

I was expecting it US $ bears will play it after the news but that didnt happened.

I am short on eur/usd..looks to me it is going back to test support 1.25 in few months time.

The dollar fell leading up to the news but even though the results were poor - three main factors:

1. Home sales value affect stock values, (See Dow performance 10 am), resulting in a shift into cash or bonds or other securities.

2. Dollar has fallen 14% in real terms in recent months and is expected to retrace.

3. US GDP figures and employment figures were good for the last quarter and US is expected to lead the recovery from recession.

Other factors as well. Ask if you want more detail or sources. Hope this helps.