The euro began last week's trading session with a rising trend against most of its major counterparts. However, close to the weekend the trend reversed and the euro lost about 170 pips vs. the U.S. dollar, and about 200 pips vs. the British pound.
The euro was strengthened early last week following hawkish comments by European Central Bank (ECB) President Jean-Claude Trichet. Trichet vowed to battle inflationary pressures and stressed the ECB is determined to fight inflation attributed to rising commodity and food prices. He also said that he doesn't see risks of an economic downturn due to sovereign budget cuts. This has boosted optimism regarding the euro-zone's outlook and as a result supported the euro.
However, close to the weekend the euro began correcting gains against most of the major currencies as unrest in Egypt has elevated risk-aversion in the market, and boosted demand for safer assets, such as the greenback and the yen. Demand for the euro, which is considered to be a relatively risky asset, was damaged.
Looking ahead to the following week, many interesting economic publications are expected from the euro-zone. The most significant of the all will surely be the Minimum Bid Rate, which is scheduled at Thursday. The Minimum Bid Rate is in fact the euro-zone's interest rates announcement for February, and analysts estimate that the ECB will leave rates at a record low of 1.00%. Traders are also advised to follow the ECB's press conference which will be held at the time, as this is also likely to generate high volatility in the market.