EUR/USD started yesterday's trading session on a high note, supported by low demand for loans offered by the ECB to European banks. Investors realized European banks might be in better financial conditions than previously thought and responded by buying the Euro while selling other currencies. However, the rally was halted following a disappointing reading on U.S. private sector jobs, and later by warnings from ratings agency Moody's that it will downgrade Spain's sovereign debt rating.

Eventually the euro ended yesterday higher against the U.S. dollar. Positive news from the euro-zone showed a decline in German unemployment and a surprisingly strong Irish GDP growth report. In contrast to the euro, the British pound declined against the U.S. dollar to the lowest price since last Friday.

Looking ahead to today investors should pay attention to the British Manufacturing PMI and the weekly U.S. Unemployment Claims report. Both are set to impact European currencies, with most analysts forecasting a further decline in confidence in the global economic recovery as a result. In this case, riskier currencies like the pound and euro are likely to drop.