Following ECB President Mario Draghi's recent pledge to do whatever was necessary to protect the Euro zone from collapse, the markets have remained optimistic about the outcome of an ECB policy meeting to be held on Thursday.
Most analysts agree that the market sentiment at the moment is that there are going to be some strong measures taken. If so, we could expect a boost to the commodity currencies and some emerging market currencies.
The outcome could well be that the ECB may soon reactivate its bond-buying programme in a bid to assist in cutting Spain and Italy's borrowing costs. Such steps may however find opposition from Germany.
With market expectations running high, it's apparent to me that the ECB simply can't afford to do nothing, as they themselves have raised the expectations.
What is also clear to me is that many remain sceptical, and justifiably so, that ECB bond-buying by itself would be enough to change the Euro's weak overall trend.
The fact is that the Euro bloc's issues are, and will remain, very complex and no single measure in itself will be enough to provide long term relief. Recent investor diversification out of the Euro bloc periphery and Europe as a whole, has longer term implications and won't suddenly turn around. If anything, the ECB's measures could provide short term respite for the Euro and so we could expect some short term spikes for the Euro.
Data is due today that could show that the jobless rate in the Euro area rose to 11.2% in June from 11.1% in May, the highest on record.
The Euro had earlier moved up 0.1% to $1.2274, however it remained below the high of $1.2390 hit last Friday.
Even so, the modest rise in the Euro had weighed on the Dollar index, which measures the Dollar's value against a basket of major currencies. The index last stood at 82.749, near a three week low of 82.343 hit the previous week.
As against the Yen, the Dollar edged up 0.1% to 78.26 Yen.
In fact the Dollar was down against most of its major peers on speculation that Federal Reserve policy makers will signal additional stimulus when they conclude a two day meeting that starts later today.
While the Fed is deemed unlikely to do a "QE3" at this point, it is possible that they could come up with other forms of stimulus. New stimulus measures could well send U.S. interest rates lower and we may see the Dollar-Yen decline as a result.
High beta currencies such as the Aussie, which are relatively volatile and tend to benefit when investor optimism about the outlook for the global economy picks up, have recently been amongst the best performers.
The Euro was down 0.2% to the Australian Dollar at A$1.1656, after having hit a record low around A$1.1646 on Monday.
In Australia, the Bureau of Statistics announced today that the number of permits granted to build or renovate houses and apartments fell 2.5% in June, a figure that was a lot lower than had been expected, and this contributed to the greenback falling to a four month low against the Aussie.
The Aussie last stood at $1.0526, having hit a four month high of $1.0538 earlier today.