Starting the week on a relatively firm footing versus the dollar, the euro faces some key challenges this week including today’s EU Summit (the 17th in two years), as well as ongoing debt restructuring discussions between Greece and its private sector investors. EU leaders will meet later to finalise the details of a fiscal pact aimed at reining in budget deficits, as well as giving the final sign off to a permanent bailout fund (ESM) with a lending capacity of EUR500 billion ($661 billion). One of the main stumbling blocks …

As markets continue to wait the outcome of the Greek debt restructuring talks, attention yesterday turned to the US FOMC meeting. The euro had lost a little ground in yesterday morning’s trading as concerns that the ECB would have to take losses on its Greek bond holdings outweighed a stronger than expected German Ifo index. However, the dollar later fell to a five week low against the single currency after a more dovish than expected outcome from the FOMC.
Fed Chairman, Ben Bernanke, said the US central bank might consider further …

After a failed attempt to break through the $1.28 level yesterday, the euro drifted lower in late afternoon trade before regaining some ground overnight. The euro found some support in a better than expected German ZEW index for January, with the survey results coming in well ahead of expectations. This has helped to ease fears about a sharp slowing in the German economy. Reports that China is set to ease monetary policy have also helped general market sentiment. However, there has been no real improvement in fundamentals and the euro …

The euro rose versus the dollar and the yen in early morning trade with stronger-than-expected GDP figures from China triggering some covering of short positions. China’s GDP growth slowed slightly in the fourth quarter of last year, rising by 8.9% as compared with the same period in 2010. While this was slower than the previous quarter’s growth rate of 9.1% expansion, it was still higher than what markets had been expecting and helped ease fears of a hard landing for the world’s second biggest economy. As well as lifting the …

Late on Friday International ratings agency, Standard& Poor’s, lowered its ratings on nine eurozone countries including triple-A rated France and Austria, citing insufficient policy initiatives by European leaders to address ongoing systemic stresses in the eurozone. Germany retained its triple-A rating, but Italy, Spain, Portugal and Cyprus all saw their ratings cut two notches. Malta, Slovakia and Slovenia were all cut by one notch. There was no change to Ireland’s rating. While downgrades had been forewarned and thus didn’t come as any great surprise, the news at the same time …

Spurred on by successful bond auctions in Spain and Italy, which led to a fall in euro zone periphery bond yields, the euro broke through key resistance at $1.2820 versus the dollar yesterday as traders moved to cover some short positions. It saw further gains overnight, rising as high as $1.2878 in early morning trade. There was also a positive reaction to comments from the chief executive of French bank Societe Generale that a deal with private creditors to voluntarily write down at least half the value of their Greek …

Euro/dollar has kept to a very tight range over the past 24 hours, regaining some stability and recovering ground from its lows of $1.2668 seen in Asian trade on Sunday night. Sentiment, however, remains fragile ahead of this week’s Italian and Spanish debt auctions, as well as key meetings on the ongoing euro zone debt crisis. German Chancellor Angela Merkel meets the IMF’s Christine Lagarde today, and is scheduled to meet Italian PM Monti tomorrow. A Germany-France-Italy summit meeting will be held in Rome on January 20, with euro zone …