The euro performed reasonably well on Friday on the back of German inflation data, which showed levels of inflation to be at a three month low. This has helped to create positive conditions for German consumers and bode well for the Eurozone recovery. Despite Fridays more positive one, the euro has started this week on the back foot, as markets are nervous that we could see the a credit rating agency downgrade for Italy as the Italian government could be near collapse following Silvio Berlusconi’s decision to remove five ministers from government. You can expect the markets to remain nervous ahead of the confidence vote on Wednesday. The European Central Bank’s interest rate decision on Wednesday and following press conference could well be influential although no change is expected so it will be the following press conference that will have the most substantial effect as investors look for clues as to the outcome of future monetary policy decisions. Other events likely to play a role in determining euro performance include today’s flash Consumer Price Index figures for the Eurozone. These are a key indicator of inflation. Another key indicator is seen on Friday when Germany releases its monthly Producer Price Index data. Following last Friday’s positive data, expectations will be for reasonable figures to bolster the single currency. Call your trader now to see how the euro fares this week.