As this week comes to an end, we can see the euro heads for the biggest weekly gain in more than twelve weeks against the U.S. dollar, supported by the improved confidence and sentiment regarding the debt crisis in Europe, with all eyes focused on the leaders' summit on October 23, especially after the Slovak Parliament was able to pass the expanded powers of the European rescue fund.

Major currencies are fluctuating against the dollar today ahead of the closely watched retail sales index from the world's largest economy, where retail sales could have been improved in September as expectations indicate, noting that in August retail sales didn't expand nor dropped, yet settled for the 0.3% expansion seen in July.

The U.S. dollar was mixed during the Asian and the European session, awaiting data from the U.S. economy to be relieved, where the index after opening the Asian session at 77.03 recorded a high of 77.28 and a low of 76.80, and is currently hovering around 77.01. Over weekly basis, the index opened this week at 78.71, and recorded a high of 78.77 on Monday and then reversed to the downside reaching a low of 76.79, and is currently hovering around 77.00.

Over daily basis, the euro was unable to record more gains during the session today, affected by Standard & Poor's act of cutting Spain's credit rating by one notch to AA- on the negative outlook for growth in addition to the high risks to financial institutions due to a possible default to the euro area's fourth largest economy.

On the other hand, the euro was supported by the improvement seen in the euro area trade balance, where the euro zone trade deficit (seasonally adjusted) narrowed to 1.0 billion euros from 3.7 billion euros deficit, while inflation stalled at 3.0%.

The Slovak Parliament passed the expanded powers of the European Financial Stability Facility, following the rest of the euro zone parliaments' approval, giving the Facility the green light to use the expanded quantity of 440 billion euros to recapitalize banks, buying bonds in the secondary market and finally providing debt-burden nations with bailouts, which provided the common currency with more strength to hold onto the gains recorded earlier this week against the dollar.

The euro on the other hand fluctuated against the dollar after the opening of 1.3776, recording the highest at 1.3827 and the lowest at 1.3722, and is trading now around 1.3786. However, over the past week, the common currency was able to recorded huge gains, where after opening the session in Asia on Monday at 1.3388; the EUR/USD pair declined to a low of 1.3376, but then rebounded sharply to the upside reaching the highest at 1.3833.