After plunging more than 100 points yesterday off the comments of Jean Claude Trichet that the ECB rate hike may be an isolated event, the EUR/USD  finally stabilized below the 1.1700 figure in early European trade. The economic news from the region was mixed and offered little help to the beleaguered currency. While German GDP data printed essentially in line rising 0.6% versus 0.5% expected, the French consumer spending numbers reported far below projections at -0.6% vs. 0% consensus. The drop was caused by the steep decline in spending on manufactured goods as slowing growth in the region's second largest economy curbed demand.

The French consumer results certainly put a damper on what looked like a potential turn in the pair as they confirmed the suspicions of euro-sceptics that growth in the Euro-zone remains fragile hampering ECB's ability to project a hawkish posture. With US economic growth materially higher than Euro-zone's and little indication from the Fed of any rate hike slowdown, the game remains the dollar's to lose. Although the euro having reached such grossly oversold levels may not have much more downside left for now, it will not be able to muster a rally until Euro-zone economic results inspire more confidence in the marker.  

Boris Schlossberg is a Senior Currency Strategist at FXCM.