The EUR erased its gains versus the Dollar yesterday as Treasury yields fell and the European Central Bank (ECB) policy makers warned against succumbing to optimism with regard to the economic situation in Europe. The EUR also reversed again versus the Japanese yen after the Euro-Zone industrial orders came in much higher than expected.

But investors are keen to see how the Euro-Zone economy fares, especially after higher-than-forecast purchasing managers' index readings last week. Traders expect Germany's Ifo survey of business sentiment to be the key event for the European currency this week.

The British pound dropped yesterday against 14 of the 16 most-traded counterparts on speculation the Bank of England will depress yields on gilts, making the U.K.'s assets less attractive to foreign investors. The Sterling declined yesterday to an 11-week low versus the EUR as much as 0.6%, the weakest level since June 8th. Analysts have said that the EUR was pushed past a key options barrier at 87 pence, setting up further gains in the pair, while traders said expectations for persistently low UK Interest Rates were weighing on the British currency.