Tuesday is going to be big for the Euro

A bunch of critical numbers are coming out tomorrow including the German and EU purchasing manager index numbers and UK CPI and RPI indices. The US housing price index numbers are largely irrelevant after today's existing housing sales numbers and the consensus which has been priced in, is likely to be spot on.

Zero Hedge is expecting below consensus numbers for the German and EU purchasing indices despite the weakening Euro through the month of February and the already low numbers. The picture on the UK numbers are a little more mixed. The big news will be the movement on EUR/USD though from an investment perspective shorting a basket of Euro pairs makes more sense. If the numbers are lower than expected, the market reaction will speak volumes. The reaction is likely to give back much of the gains the Euro made against the dollar last week but will still end ahead on a WoW basis.

However, if the numbers are lower than consensus and the Euro holds the 1.355 level the outlook is pretty grim for the dollar on a 3-4 month horizon.