The week has started with the euro and pound continuing to weaken against the greenback, amid renewed worries about the ECB€™s next rate move and the UK government's monetary budget which will be announced in a few days. Meanwhile the dollar continues to benefit from risk aversion and the minute traders don€™t feel optimistic, we'll see a rise in safe haven need, hence the dollar and yen strengthening.

The EUR/USD is trading lower again today; with the pair breaking 1.30 after the market opened, and the next level to watch is 1.2930 ahead of 1.2870. The failure of the pair to break higher over recent days indicates there is substantial risk to the downside towards 1.25, especially if the ECB fails to reassure traders on the future monetary outlook. For now, 1.3060 is a good resistance level for the pair and only a break of the latter may indicate a temporary halt in its accelerating downturn.

Today's economic calendar is almost empty, with no important economic releases, however traders are positioning themselves for a busy week data wise, with important UK and Euro zone data out over the coming days, and also durable goods and Housing data out of US. It will be very interesting to watch UK and Europe's inflationary data and also the IFO and ZEW, as speculation of more easing by the ECB is mounting as the economic outlook continues to deteriorate. The fact the ECB members and Mr. Trichet are split over policy views is still keeping traders away from bidding on the euro and until this is settled, the single currency looks doomed for now.

The European markets are down amid investor concern and US stocks may follow suit, however it will be interesting to see how the recent futures and equities rally progress and if risk aversion will come back once again to ruin trader€™s plans for a bigger move on the upside.

For now, levels to watch for EUR/USD and GBP/USD are 1.2930 and 1.45 respectively. The later level is very important for the pound and traders may want to use the fall to buy on dips for another try towards 1.50. However, with the UK data and MPC minutes this week, the pound may see choppy action against the dollar and euro, and the direction will remain unclear until the UK government speaks.