The euro has been on an uptrend against the US dollar today, with EUR/USD up 45 pips to $1.2305 by around 4pm (London time), on the view that the ECB may unveil bold policies measures to contain the eurozone debt crisis on Thursday.
However, it appears as though expectations are currently running too high. The German finance ministry today said it saw no need to grant Europe's bailout fund a banking licence. In my view it will be difficult for Mario Draghi to deliver any bold measures in the short term, which means that euro bulls may end up being disappointed.
The euro also risks coming under pressure following tomorrow's FOMC decision. There has been some talk that the Federal Reserve is likely to postpone QE3 tomorrow since the economic data released recently has not been bleak enough to justify its revival. The consumer price index and Chicago PMI for July were released earlier today and both were ahead of consensus expectations with readings of 65.9 and 53.7 respectively.