Euro Holding Steady Despite Moody's Negative Rating

The Euro held held firm on Tuesday despite Moody's changing the regions rating to a negative. The Euro outlook remains bright as investors are banking on the ECB to unveil a plan to tackle the region's debt crisis later this week.

Whether or not this will come through, remains to be seen. Moody's also warned that it might downgrade the bloc if it decides to cut the ratings on the EU's big four i.e. Germany, France, UK and Netherlands.

Draghi's plan is expected to bolster confidence, however with long term forces acting on the Euro, the currency will likely remain an underperformer. Let's take a look at its position today and the week ahead.

The Euro has gained against the Yen, riding the waves of speculation that European Central Bank (ECB) President, Mario Draghi, has plans to purchase bonds of debt burdened nations in the region, in order to boost confidence in the currency.

At the central bank's meeting on Thursday, Draghi may reveal details of any plans or, he may wait until after September 12th, when Germany's Constitutional Court rules on the legality of Europe's permanent bailout fund.

Earlier today, the 17 nation Euro rose against most of its major peers. It neared a two month high to the Dollar, ahead of today's meeting between European Union President Herman Van Rompuy and German Chancellor Angela Merkel. Also scheduled today are talks between Italian Prime Minister Mario Monti and French President, Francois Hollande.

On Monday Moody's Investors Service cut the EU's rating outlook to negative, a move seen as reflecting the risks of the crises to Germany, France, the U.K. and the Netherlands, all of which account for about 45% of the group's budget revenue.

The ECB's meeting on Thursday however, remains in focus and what we could see, should the ECB disclose that it will purchase bonds with up to a three year maturity, would be a positive surprise for the Euro.

Ahead of the meet we could see some short covering of the Euro. Short covering occurs when investors end bets that an asset will decline.

Greece's institutional creditors are also set to decide whether Greece merits access to aid that would help it stay in the EU, and in Holland, Dutch citizens will be voting on parties that include a group that advocates exiting the bloc.

With a myriad of events on the horizon, traders and strategists appear more divided than at any time since 2011, over whether officials will be able to keep the currency from plummeting. September could be one of the most pivotal months in the Euro's 13 year history.