How do you explain?

Yesterday the USD gained vs. EUR like seldom before: what’s behind this move? Which emotions have been awakened in traders’ minds?

The first reason I can see is the extended move upwards of the cross rate; on the other hand, US markets still seem vulnerable and the mortgage crisis is probably far from its end.

So what do the newspapers say today?

According to the Financial Times, markets were concerned “that problems in the US subprime mortgage and credit markets could spread to other economies”.

Bloomberg reports that “the world’s biggest economy can withstand rising mortgage defaults”.

Seems a bit contradictory, doesn’t it?