There was no particular data to drive the price action on the day.

Some analysts cited comments from Bank of France Governor Christian Noyer, who told French radio that comments about the ECB being ready to take any “necessary” steps to bring inflation back down to its 2% target by 2009, were misinterpreted.

Noyer amended his remarks, saying that, “Movements can go both ways … I would never engage in a discussion about the future path of interest rates, simply because nobody knows.”

Today’s release of the key IFO business survey from Germany will be “a big test” for the euro, according to Ashraf Laidi, currency strategist at CMC Markets. “That survey has historically been the key dynamic that determined the euro’s moves higher.”

Earlier in the day, the euro breached the psychologically significant $1.60 mark for the first time, before yielding it to some late selling. So now what?

It could well get worse, says Kathy Lien, chief strategist at Forex Capital Markets. Noting that the skyrocketing price of oil will affect everything, “This continual rise in inflationary pressures raises the risk of a rate hike from the European Central Bank,” Lien says. And that of course is even more dollar-negative.

Playing into that fear, Bank of France Governor Christian Noyer, who is also a member of the ECB’s rate-setting Governing Council, said Tuesday that the ECB would do whatever is necessary, including moving interest rates, to ensure that inflation returns to the central bank’s target of just below 2% by 2009.

Yesterday’s data included a report from the National Association of Realtors showing that resales of U.S. homes and condos dropped 2% in March. Resales have now sunk 19.3% in the past year, and are down 33% from the peak in 2005.

“There is still little evidence of stabilization in U.S. housing markets, though the recent pace of decline in sales has slowed,” wrote Sal Guatieri, of BMO Capital Markets.

“Sales will eventually benefit from improved affordability, but the near-term picture remains clouded by ongoing job losses and more discriminating lenders,” Guatieri said.