Athens - Another week is starting, with US and UK markets close on Monday due to holiday. The activity in the currency markets was very small, with thin liquidity the main event of the day.

EUR/USD consolidated within a 50 points range, hitting 1.5790 high and 1.5740 low as traders were enjoying the day away from their screens.

Last week we saw a lot of dollar weakness almost daily, what with economic data out of the US being negative and Euro zones data coming out much better than expected. Lest not forget that German IFO was above expectations and that together with hawkish ECB comments about inflation gave euro some strength. Many officials from Europe, including IFO Chief, said that they agree with the recent remarks from ECB and they think that the next move by the bank should be a rate hike. That comment alone gave euro a push towards 1.58. The fact that more comments out of Europe support a rate hike an give a rate cut no chance, that certainly put euro back to its recent positive bias.

But lets see what we have this week and how the events of the day will influence the currencies

Today the only important economic release is due later this afternoon from the US and its the new home sales. Most forecasts expect this number s to come lower for another month and if that happens then we might see further sales in the greenback. The reason why the dollar is weakening against all major currencies is mainly fear for further deterioration in the US economy even after the hawkish comments from the FED officials last week. The fact that most analysts predict that Bernanke and co will keep interest rates unchanged, is giving the dollar some boost but its not enough to let the currency enjoy its recent strength towards 1.51.

Later this week we have more important data out, with durable orders being one and GDP being the other. Both news are important for the greenback and if we see further signs of slowing in the economy, then that would ultimately mean more weakness in the dollar.

EUR/USD hit 1.5820 early this morning but the move didnt find any further support and therefore it went all back down to test important support at 1.5725. The Euros fall was supported by negative economic data out of Germany and some rumors that were going around the wires that major European banks will announce losses due to the subprime mortgage crisis.

So, lets see how markets will react this week and how will the data influence the dollar in the coming days

Whatever happens this week, one thing is for sure: with oil a=again above $133 per barrel and further negative data out of the US, dollar will struggle to gain momentum and therefore we might see EUR/USD back towards recent highs at 1.60