The European session today was focused on the fundamentals rather than remaining exclusively depicting the debt crisis developments and the outlook for Greece. Downbeat fundamentals generally fueled the worries across markets, sending currencies and equities lower as the underlying macroeconomic status in Europe remains weak!

Investors are still skeptic over the outlook and certainly they reflect the state of high uncertainty that lingers ahead, which is quoted continuously by policy makers. The advanced PMI estimates from the euro area are compatible still with the state of mild recession and that is surely a key component that will affect the outlook for the monetary policy and also the debt crisis as the slower the growth status the deeper the debt crisis, it is all intertwined!

With the contraction reported from China according to the flash HSBC PMI estimate turning to the euro area manufacturing and services sector it all just makes sense, growth is still fragile! The contraction might seem mild and actually at a slower pace, especially in China, yet with a fragile sentiment since yesterday, it is still contraction that is what the market sees.

This gave the opportunity for greenback to regain some lost grounds as the Dollar Index (USDIX) turns higher. The index is currently hovering around 79.25 around the intraday high, adding nearly 0.20% and rebounding from the day's low record of 79.00.

As for the euro, the currency was pressured to the downside after the advanced PMI reading for February showed that both manufacturing and services sectors contracted, sending the gauge of aggregate performance, the PMI Composite back into contraction at 49.7 from 50.4 in January.

The weak data comes in line with exhausted Greek optimism, where the market failed till now to resume the rally on the Greek bailout as it has been supporting the pair for the past period and now that it is confirmed investors are reassessing the impact as it surely helps Greece yet again does not end the debt crisis or solve the evident weak growth problem.

The EUR/USD is still hovering in a tight range into the European session and currently trading around $1.3237 nearly flat after setting the high of $1.3264 and the low of $1.3212. The pair remains stable with trading above $1.3200 areas which as far as they remain intact the pair might return to attack areas of $1.33 once again especially in the U.S. housing data can revive the optimism in the market.

As for Sterling, the royal currency took a strong hit and the currency declined against most of its major peers after the BoE minutes unexpectedly showed the rift among policy markets as Adam Posen and David Miles both dissented from the majority and called for a bigger 75 billion pound increase in asset purchases defying the majority that called for 50 billion pounds.

Both members see that the risk of a protracted period of weak demand might push inflation materially below the 2.0% target. Their call pushed sterling further to the downside on the assumption that more easing might be called for and the fact that the economy is indeed suffering deeply the European debt crisis.

The GBP/USD slumped to print the session low so far of $1.5698 and currently hovering around $1.5705 down nearly 0.46% after setting the high of $1.5814 earlier in the session. The bearish bias is seen on the pair especially with the daily closing below $1.5785 and the breach of $1.5760-30 areas extended the downside move that will likely continue for the rest of the session today.