As this week comes to an end, optimism dominates the European markets on speculation European lawmakers will be able to find common grounds and expand the fire power of the European rescue find, a step that is needed to calm markets and restore confidence.

The sentiment improved in the market as European lawmakers are expected to increase the capacity of the European rescue fund, where European finance chiefs are to meet in Denmark for two days probably to discuss the expansion of the firewall that is projected to shield Spain and other large economies from the contagion of the debt crisis.

The talks come after Germany responded to international and local mounting pressures and decided to allow the expansion of the European rescue fund, where European nations are expected now to combine the temporal European Financial Stability Facility and the Permanent European Stability Mechanism together, creating a one-trillion firewall that will likely support indebted nations and shield others from falling into the debt-trap.

The euro surrendered some of the gains recorded earlier today on fears Spain will not be able to control the budget deficit, where investors are waiting the Spanish Government to announce the most austere budget-cut measures today, after the Prime Minister Mariano Rajoy clarified that Spain will adopt the deepest round of austerity in order to meet public deficit targets and also to strengthen the nation's economic situation against the debt contagion.

Concerns are still seen in the market, where all eyes are still tracking the announcement of the Spanish budget for more details regarding the coming fiscal year for the nation, where investors are still wondering how Spain will be able to force more cuts without affecting growth further, where the Spanish unemployment reached more than 20%, while the nation contracted for the second consecutive month, which means technically that the country slipped back into recession.

However, we can see the euro is barely moving after the fundamentals released today, where due to the important and critical European finance chiefs' meeting and the Spanish budget announcement markets weren't affected sharply by the downbeat German retail sales index nor by inflation data.

The common currency is heading towards posting weekly gains versus the U.S. dollar, which slipped after Bernanke's disappointing comments that concluded that the pace of recovery might not continue in U.S. without further easing and in result indicating at another round of quantitative easing.

The EUR/USD pair is trading in the moment around $1.3350, compared with the opening level of $1.3301. The pair recorded so far the highest at $1.3376 and the lowest at $1.3293. Over weekly basis, the pair reached a high of $1.3385 and a low of $1.3191.