Greece's budget crisis has been driving trading for the EUR, but this issue may be put to rest tomorrow when the European Commission on Greece's plan to reduce the government budget deficit meets today. The EUR was supported today as the spread on Greek government bonds tightened from their high last week. Larger spreads in government bonds are viewed as a poor signal of financial stability and increased risk in holding the debentures. Greece currently has a budget gap close to 13% of its 2009 GDP. The European Union mandates budget deficits up to 3% of GDP.
A news heavy week promises to create volatility for the major pairs of the EUR. The strengthening the EUR experienced today may not continue throughout the week. On Thursday the European Central Bank will publish its minimum bid rate along with the accompanying announcement explaining the central bank's position on the European economy. The market is not expecting the central bank to show a significant improvement to the European economy. This could weigh on the EUR during this week's trading.