The euro retains some force despite concerns surrounding the situation in Greece. This is driven by hopes for ECB intervention in the bond market and further FED easing.

If monetary financing is prohibited by the Treaty of Lisbon, the European central bank, however, can easily overcome this limitation, as it has done in the past, intervening on the secondary bond market to support the poorest countries in difficulty. This perspective supports the Euro as some rumors suggest that the ECB could determine a maximum rate or interest rate differential with the Bund, beyond which it would act to reverse the trend.

Not hampered by these restrictions, the Fed could instead engage in a third round of quantitative easing if the economic downturn continues, as suggested by the minutes of the last meeting, which was held from July 31 to August 1. But due to the recent improvement in U.S. data and easing tensions in Europe in August, these considerations seem obsolete.

Traders are also expecting a solution in Greece while Greek Prime Minister, Antonis Samaras, went from meeting to meeting with Jean-Claude Juncker, Merkel and François Hollande, and asked for more time to implement the spending reforms. Although each of his interlocutors was strongly opposed to the country leaving monetary union, the Franco-German duo awaits the report of the Troika mid-September to review the situation further.

Technically, a renewed appetite for risk has allowed the European currency to be back above USD 1.25, attractive threshold around which it could now consolidate, waiting for new signals about the intentions of the ECB.