At 2p.m today talks between the Eurozone and Greece will resume over the contested issue over Greece’s debt. So far deliberations over the Debt Renegotiation has affected the major currency pairs with EUR/USD consolidating for large portions of last week.

Based on the decisions made by the European central bank and Greek Government, we should be able to gauge the market direction in which the Euro is heading. A failure to reach an agreement will be viewed as dovish and will add to the current level of uncertainty within the Euro Zone. However if an agreement is reached, a greater level of confidence will be restored in the Euro, which will be viewed as hawkish, at least in the short term. That said, time is running out for a tidy resolution on either side. Indications from Greece suggest the government is not keen to show any signs of wavering, which does not bode well for the EURO currency if both Greece and the ECB cannot come to a uniform decision.

Today EUR/USD has traded within a tight consolidation, reaching a high of 1.14286 and a low of 1.13950. The market will remain relatively quiet, as the market awaits the Euro Group meeting, which will set the tone for the EURO’s market direction.

Overnight, Japan clawed back gains over major pairs following key economic sentiments, with industrial production and capacity utilisation coming out at 1% and 2% far better than expected suggesting a return to growth in the GDP numbers. As such USD/JPY fell from 120 and has started to lose momentum, now consolidating around the 118 mark.

Following last week’s inflation report, Cable has pushed above the 1.54 level and EUR/GBP is currently trading around 0.74. Inflation data will be released for the UK at 9:30 A.M. tomorrow and will be a key focus given last week’s inflation report. Lastly since its President’s day in the US, volatility is likely to be low due to no US economic sentiments.

Looking at the economic calendar for this week, economic sentiment such as the Euro group meeting on Monday, UK Consumer Price Index on Tuesday, Bank of England MPC vote and US FOMC on Wednesday will give major currencies market direction this week. Thursday and Friday will be opportunities to trade currencies based more on technical analysis due to the lack of key economic sentiments.

By Adheesh Singh