After the heavy losses sustained at the beginning of the week, when the EUR declined by more than 300 pips against the Dollar, the European currency reversed and recorded some bullish gains against the greenback. Despite the bad economic data coming from the Euro-Zone, the Euro was able to sustain its strength against the USD. This is in part owed a lot of negative economic data that was released form the U.S. yesterday. The weak European economy and the increasing possibility of European Interest cuts did however lead the EUR to decline nearly 200 pips against the JPY, to close at 124.55.

Yesterday's European economic news showed that German manufacturing orders plunged higher-than-expected, by -6% in November. This was caused by shrinking demand at home and abroad. In addition, EUR was negatively impacted by the release of the worse-than-expected Consumer Confidence figures. Adding to the grim data from the European Union, 3 of the Euro-Zone's leading economic research institutes cut their estimate for GDP for the 4th quarter of 2008. They adjusted their forecast to -0.6%, from an October prediction of 0%. They also lowered their forecast for the 1st quarter of this year to -0.4%, from +0.1%.

As for today, a batch of data releases is expected from the Euro-Zone. Special attention should be given to the German Retail Sales, which is scheduled at 7.00 GMT and the German Industrial Production at 11.00 GMT. Traders should also follow data releases from the U.S, such as Non-Farm Employment Change, and Unemployment Change.