The EUR/USD pair gained some momentum yesterday after the relief rally seen in the market, where the pair appreciated on the encouraging comments from European leaders who are to speed up the implementation of a closer fiscal integration in order to stop the debt crisis from affecting larger economies within the zone.

With the absence of the United States yesterday for the Martin Luther King's day, volatility was seen in the market; however, the sentiment in general improved and supported the pair to recover some of the huge losses incurred in the past week after the rating agency S&P downgraded the French credit rating.

Today, the euro area region is to release some important data, where the inflation is expected to ease in December in line with the annual flash estimate, which suggested that inflation slowed to 2.8% from 3.0%.

Eyes will also be on the confidence data from the euro-zone and Germany, with expectations the economic sentiment may improve slightly, while the confidence in the current situation is expected to fall. Any improvement in the confidence could trigger some positivity to the market ahead of the critical bond auctions in Greece, Spain and Belgium.

The euro area will start the data at 10:00 GMT with the December inflation figures, where the CPI index is expected with 0.4% rise on the month after 0.1% gain and on the year to confirm the flash estimate and fall to 2.8% from 3.0% while core CPI inflation to hold at 1.6%.

At the same time we have the ZEW Economic Sentiment for January to see if there is any improvement from December's -54.1.

Germany will also release the ZEW Survey for January at 10:00 GMT as the Current Situation index is expected to fall to 24.5 from 26.8 while the Economic Sentiment Index is expected to improve to -49.8 from -53.8.

As for the United States, the day will start at 13:30 with the January Empire Manufacturing index which is expected with improvement to 10.50 from 9.53.

Auctions:

09:30 GMT Spain sells bills

10:00 GMT Greece sells bills

10:30 GMT Belgium sells bills