The Euro pared the overnight advance to 1.4235 and the single-currency may continue to lose ground throughout the North American trade as uncertainties surrounding the region bears down on market sentiment. As Greece’s parliament reviews the additional austerity measures laid out by Prime Minister George Papandreou, market participants will certainly keep a close eye on the outcome, which is due out on June 29, and the single-currency may face additional headwinds in the days ahead should the policy makers struggle to meet on common ground. As the European periphery face record-high financing costs, the heightening risk for contagion certainly dampen the outlook for the Euro, and the exchange rate may continue to push lower in the following month as fears surrounding the sovereign debt crisis overshadows the prospects for a rate hike in July. Although the European Central Bank talks up speculation for a 25bp rate hike in the month ahead, currency traders may overlook the hawkish tone held by the Governing Council as policy makers struggle to restore investor confidence and the bearish sentiment underlying the single-currency may gather pace heading into July should Greece fail to gain additional support from the EU. As the EUR/USD trades within a descending triangle, the pair should continue to consolidate over the near-term, and there could be a sharp selloff in the exchange rate as price action approaches the apex. In turn, a close below 1.4000 could foreshadow the expected downturn in the euro-dollar, and the pair may work its way down towards the 61.8% Fibonacci retracement from the 2009 high to the 2010 low around 1.3880-1.3900. The British Pound certainly failed to hold its ground on Monday, and the GBP/USD may continue retrace the advance from earlier this year as it breaches the March low at 1.5936. As the Bank of England is scheduled to testify on its inflation report in front of Parliament, dovish comments from the central bank is likely to spark a bearish reaction in the British Pound, and the reversal in the pound-dollar could gather pace over the next 24-hours of trading as market participants speculate the MPC to expand policy further over the coming months. In turn, the exchange rate may fall back towards the swing low seen back in January around 1.5750 as it searches for support, but we could see a near-term correction before there’s a larger move to the downside as the relative strength index continues to hold above oversold territory. U.S. dollar price action was largely mixed during the overnight trade, but the greenback appears to be regaining its footing as the slew of dismal data coming out of the world’s largest economy bears down on risk sentiment. Indeed, the slower pace of income growth paired with the downturn in personal spending reinforces a weakened outlook for future growth, and the risk-off trading environment may prop up the reserve currency throughout the North American trade as it benefits from safe-haven flows. However, an improvement in the Dallas Fed manufacturing report could impeded on the U.S. dollar rally as currency traders to increase their appetite for yields, but the shift away from risk-taking behavior is likely to gather pace over the near-term as the Federal Reserve starts to withdraw monetary stimulus.

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