Euro Holding On To Gains Ahead Of Fed Meetings

The Euro dropped against the US Dollar during early trading today but managed to hold steady near its recent 4-month high. The fall came after weak US jobs data raised speculation that the US Federal Reserve would introduce more monetary stimulus later this week.
Last week, the Euro was aided by the ECB's plan to help lower borrowing costs for troubled Euro Zone nations, and the currency managed to hold on to much of its gains from last week.
However, the Euro will more than likely run into tough resistance in the form of the Fed's two-day policy meeting scheduled to run until Thursday this week.
Euro Weakens Ahead Of Samaras Meeting with Lenders
Earlier today, the Euro was showing signs of declining ahead of Greece's Prime Minister, Antonis Samaras, meeting officials from the nation's lenders. This has reignited concerns about the region's debt woes
Greece's Prime Minister, Antonis Samaras, is due to meet with officials from the Euro area, the European Central Bank (ECB) and the International Monetary Fund (IMF) today.
The Euro declined against most of its 16 major peers, following the failure of Samaras in securing agreement from his coalition partners on 11.5 billion Euros ($14.7 billion) of spending cuts required by Greece's lenders.
Fotis Kouvelis, Greece's Democratic Left leader, whose party is one of the three in the coalition government, announced that no decision has been made on spending cuts. He added that poorer Greeks should be protected from austerity measures.
The three coalition leaders agreed to meet again on Wednesday, before Euro area finance ministers meet on Friday to be briefed on Greek progress.
On Wednesday, Germany's Federal Constitutional Court is due to rule on Germany's participation in the European Stability Mechanism (ESM). The ESM is a permanent 500 billion Euro fund that offers loans to member states and that may purchase their bonds to lower borrowing costs.
As Germany is the largest economy in the EU, it is also expected to be the biggest contributor to the fund as it holds a 27% share.
I agree with expectations of many analysts, that we could see a decline in the Euro in the medium to long term as some countries in the Euro region simply won't be able to make much progress in deficit reduction, or fiscal consolidation.
So far the Euro has fallen 3.5% since the start of 2012. In comparison, the Yen has dropped 3.8% and the Dollar 2%.
Earlier today the Euro was down 0.3% to $1.2784 and had fallen 0.2% to 100.01 Yen.
The Dollar remained steady at 78.23 Yen.
The Dollar Index was the lowest it has been since the 11th of May, at 80.301. IntercontinentalExchange Inc. uses the Dollar Index to track the greenback against the currencies of six U.S. trading partners.
This followed a report released last week that showed that U.S. jobs growth had slowed. This in turn has bolstered speculation that the Federal Reserve will undertake a third round of bond buying.
Labor Department figures, released on Friday, showed that nonfarm payrolls had increased by 96,000 in August, down from 141,000 in July. The unemployment rate was now 8.1% compared with a rate of 8.3% in July.
Two weeks ago the Fed Chairman, Ben S. Bernanke, had said that weak hiring and unemployment exceeding 8% posed a "grave concern".
He went on to say that bond purchases are an option to spur growth. The Fed will start its next two day policy meeting on Wednesday.