The euro gained against its biggest rival on Tuesday as President ECB Jean-Claude Trichet decided to focus on euro zone’s inflation instead of region’s debt problems. Traders took it as a sign for possible interest rate hike in the future.

Currency strategist Andrew Cox from Citigroup commented, “Both the euro and European interest rates pushed higher this morning after Trichet again repeated that the ECB remains in ‘strong vigilance mode’ and highlighted that the ECB remains undeterred by developments in the periphery in its pursuit of the dual policy path.”

The euro gained to 1.4366 versus the greenback as compared to 1.4275 on Monday’s North American trading session.

The dollar index DXY which measures the US dollar’s performance against its major six rival currencies declined to 75.059 on Tuesday as compared to 75.338 on Monday’s late trading hours.

Many analysts believe that euro could face correction in coming days as voting on austerity plan by Greece’s parliament is due. The Greece’s parliament will be securing 12 billion euros equivalent to $17 billion as for the first round of bailout funds.

On the other hand some of analysts believe that the bailout package will not be able to help Greece much as the country is accumulating more debt.

The British Pound slightly declined versus the greenback to 1.5945 on Tuesday as compared to 1.5979 on late Monday.

The Australian dollar advanced to 1.0546 against the US dollar as compared to 1.0436 on Monday’s late trading hours. The US dollar however gained versus the Japanese yen to 81.14 as compared to 80.86 on Monday.

The Euro declined against its major rival on Thursday on the comments of ECB President Jean-Claude Trichet indicating that effect of the expected interest rate hike is already priced in euro. Managing director Michael Woolfolk from BNY Mellon Global Markets commented, “Trichet’s remarks prompted a classic ‘buy the rumor, sell the fact’ reaction in the foreign-exchange market, with players taking profit on over bought EUR positions.”

The euro declined to 1.4508 versus the greenback on Thursday as compared to 1.4573 on Wednesday’s North American trading session. It is expected that ECB will increase its key interest rate in next meeting which stands at 1.25 percent.

ECB president also disclosed in his address that inflationary pressures will moderate in 2012. Most of analysts now believe that increase in interest rate will be for one time only instead of series of steps for interest rate hike.

The dollar index DXY which measures the US dollar’s performance against its major six rivals surged to 74.20 on Thursday as compared to 73.946 on Wednesday’s later trading hours.

The British Pound also declined 0.17 percent versus the US dollar to 1.6368 on Thursday as Bank of England decided to keep its key lending rate at a record low of 0.5 percent due to sluggish economy.

The US dollar gained 0.56 percent versus the Japanese Yen to 80.3550 on Thursday while the Australian dollar slipped 0.03 percent to 1.0630 against the greenback.

List of events to affect the trading of the Euro for the week June 6^th, 2011 to June 10^th, 2011 is as follows:-

On Monday June 6^th, 2011, Germany will report its official data on factory orders while official report on producer price inflation and investor confidence will be published in euro zone.

On Tuesday, June 7^th, 2011, official data on euro zone’s retail sales will be reported which is considered as the key indicator for measurement of consumer spending. Germany will also report its data on factory orders. In United States official data on consumer credit will be published. Moreover, Chairman Federal Reserve Ben Bernanke will publicly address which will be closely watched to assess the future direction of monetary policy.

On Wednesday revised figure for first quarter gross domestic product will be published in euro zone while Germany will report its official data on industry production. In United States, official report on crude oil inventories will be reported while US Federal Reserve will publish its Beige Book.

On Thursday, June 9^th, 2011, United States will report its figures on trade balance along with weekly report on initial jobless claims. In euro zone, European Central Bank will announce its minimum bid rate while ECB President Jean-Claude Trichet will speak with press conference.

On Friday, June 10^th, 2011, several reports will be published in United Sates including data on import prices and data on Federal budget balance. In euro zone, Germany will report its revised data on consumer and wholesale price inflation while France will publish is official report on industrial production.

Following is the list of main events that could affect the trading of single currency against the US dollar for the week ending May 27th, 2011.

Today Germany is supposed to release its Flash PMI estimates for May, manufacturing PMI is expected to be around 62.3 while services PMI is expected to fall to 61.3. Euro zone’s Manufacturing PMI and Services PMI are also supposed to be released today.

On May 24th, 2011 Germany will report its gross domestic figure for the first quarter along with Germany’s IFO business survey which will address the debt situation in euro zone and investor’s confidence.

In United States home sales index for the month of April will be released which is expected to surge by 1.7 percent.

On Wednesday May 25th Germany will report its Gfk confidence while United States will report its durable goods orders for the month of April and house price index for the month of March.

On Thursday ECB President Jean Claude Trichet will address publicly and give hints on future direction of euro zone’s monetary policy. United States will release its second estimate for Gross Domestic Product Index for the first quarter 2011which is projected to be around 2.2 percent.
Data on US jobless claims will also be released on Thursday for the week ending May 21st.

On May 27th, 2011 Germany will report its consumer price index and retail sales data. Moreover euro zone will also release its M3 Money Supply report. In United States University of Michigan will report its final estimate for consumer confidence for the month of May. These factors could effect the euro exchange rate.