Market sentiment is tapering off ahead of the FOMC Minutes as the central bank continues to endorse a wait-and-see approach, and the statement may continue to sap risk-taking behavior should the Fed talk down speculation for another round of quantitative easing. Talking Points Euro: Greek Looks For More Time, ECB’s Independence Remains At Risk British Pound: BoE’s Posen Argues For More Purchases, RSI Approaching Overbought U.S. Dollar: Existing Home Sales To Rebound, All Eyes On FOMC Minutes Euro: Greek Looks For More Time, ECB’s Independence Remains At Risk The Euro slipped to 1.2442 on Wednesday amid the drop in risk-taking behavior, and the single currency may weaken further over the remainder of the week as the economic docket is expected to show manufacturing and service-based activity contracting once again in August. At the same time, headlines coming out of Europe may drag on investor confidence as Greek Prime Minister Antonis Samaras looks to buy more time in meeting the budget target, but there’s growing speculation that the region may need additional funding as the debt crisis continues to drag on the real economy. Despite the mixed views surrounding the European Central Bank’s bond purchase program, it seems as though President Mario Draghi will put the institution’s independence on the line in an effort to save the monetary union, but the non-standard measure may come under increased scrutiny as it will only help to buy more time. As we see the Governing Council embarking on its easing cycle throughout the second-half of the year, the relief rally in the EURUSD is likely to be short-lived, and we should see the downward trend carried over from 2011 continue to take shape as the ongoing turmoil in the financial system raises the threat for a prolonged recession. Indeed, the recent series of higher highs paired with higher lows favors a bullish bias for the coming days, but the lack of momentum to push back above former support around the 1.2500 figure may produce a lower top in the EURUSD should we see a slew of negative developments coming out of the euro-area. British Pound: BoE’s Posen Argues For More Purchases, RSI Approaching Overbought The British Pound bucked the trend and maintained the overnight advance to 1.5816 despite the shift in market sentiment, and the sterling may continue to outperform against its major counterparts as market participants appear to be treating the U.K. currency as a safe-haven. Nevertheless, Bank of England board member Adam Posen, who is scheduled to leave the Monetary Policy Committee at the end of the month, argued that the board ‘should be buying things other than just Gilts’ as the economy remains in ‘stagnation,’ but we may see the bank stick to the sidelines throughout the remainder of the year as economic activity is expected to gradually gather pace in the coming months. As the GBPUSD appears to be carving out an upward trend, we may see the pound-dollar continue to retrace the decline from May, but we will be keeping a close eye on the relative strength index as it approaches overbought territory. U.S. Dollar: Existing Home Sales To Rebound, All Eyes On FOMC Minutes The greenback bounced back ahead of the FOMC Minutes, with the Dow Jones-FXCM U.S. Dollar Index (Ticker: USDOLLAR) advancing to an overnight high of 10,030, and we should see the reserve currency appreciate further during the North American trade as we expect the Fed to talk down speculation for QE3. Although U.S. Existing Home Sales are projected to increase 3.3% in July, market participants may show a fairly muted reaction to the report as they weigh the prospects for future policy. As private sector activity gradually picks up, we may see the FOMC sound a bit more upbeat towards the economy, and the committee may strike a less dovish outlook for monetary policy as the world’s largest economy gets on a more sustainable path.

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