By: Barbara Zigah

The Euro lost some of its earlier gains as investors’ disappointment in the Eurozone’s policy leaders becomes more evident. Traders had, up until recently, been hopeful that the leadership was finally in the process of taking serious measures to address the growing fiscal problems. But that hope was dashed on the news yesterday afternoon that the E.U.’s finance ministers had decided to cancel what had been hailed as a critical meeting. As reported at 12:45 p.m. (JST) in Tokyo, the Euro was holding its own against the greenback, trading at $1.3921, off the 6-week of $1.3959; overnight it slipped to a low of $1.3847.

Market expectations of a credible outcome to the Eurozone crisis have now been properly adjusted and lowered, and analysts don’t expect that the common currency will be greatly impacted. Unless, of course, there is a surprise to the upside, in which case a target of $1.400, seen as major resistance, could ignite another risk rally.

The U.S. Dollar found itself under pressure from economic data released yesterday; consumer sentiment was reported at well more a more than two year low in October, and housing prices remained unchanged from the August lows. Markets will expect that evidence of further deterioration of the U.S. economy will spur the U.S. Federal Reserve into action to provide more stimulus, beyond the recent Operation Twist scheme.