The EUR has started the New Year in a complete reversal from where it ended. The European currency has shown considerable weakness against both the Dollar and the Pound. The last two days of trading have seen sharp reversals in both the EUR/USD and the GBP/EUR. Yesterday the EUR/USD closed the day sharply lower at 1.3546, while the EUR/GBP also saw heavy losses to end the day down at 0.9290.

Fundamentals are once again driving the depreciation of the EUR. Speculation is mounting that continued economic weakness in the Euro-Zone economy will force the European Central Bank (ECB) to cut Interest Rates at its next meeting on January 15th. ECB Vice President Lucas Papademos spoke of easing European Interest Rates as the ECB will look for a continued drop in inflation when making their decision.

Today the EUR may be influenced by indicators due to be released from Great Britain and the U.S. From Britain, the Services PMI index will be released, and from the U.S. the Pending Home Sales. Traders should look to the Home Sales report to potentially beat market expectations for an influence on the EUR/USD price.