On a day of little data the Euro has earned a brief respite from its sovereign debt doldrums, rebounding from Friday's lows of 1.3585, it appears to be starting to unwind some of its recent oversold momentum.

However, with a number of commodity indices breaking down through their 200 day moving averages, and equity markets also looking vulnerable, the US dollar will continue to be the main beneficiary of this sovereign debt uncertainty.

Especially so now that the Greek unions have confirmed their 24-hour walk-out on Wednesday in protest over the government's austerity measures. It would appear that the Greeks still don't get it, and this starkly highlights the problems ahead for the politicians.

This dollar strength will continue to undermine the Euro, and while it may be vulnerable to the occasional pull back the long term direction of the Euro has switched to a test of 1.3485, and lower towards 1.3000.
Any pull backs could be limited to the 1.3800/50 area which was the 50% retracement of last years bull run from 1.2460 to the highs at 1.5145.

The only currency where you could see dollar losses is against the Japanese yen as investors go back to using the yen as a funding currency.
This should continue to push the dollar back towards support around 88.25, which is 61.8% retracement of the up move from the lows at 84.80, to the highs at 93.75.

At some point traders need to be aware of possible Bank of Japan interest, but this won't happen until we see a move closer to 85.00.

Sterling appears to be also treading water ahead of Wednesday's Bank of England inflation report, which is expected to see some upward revisions to the inflation estimates for 2010.
Against the dollar it is still losing ground but as in the Euro's case it is rebounding off its lows of 1.5535.
It needs to recover back through its previous lows at 1.5705/10 to stabilise in the short term, otherwise the danger of further downside towards 1.5190 remains the risk.

Related share prices