Euro Weighed By Debt Fears, All Eyes on EFSF Vote

Fears surrounding the sovereign debt crisis resurfaced on Tuesday as European Central Bank President Jean-Claude Trichet held a cautious outlook for the region, and the shift away from risk-taking behavior may gather pace throughout the North American trade as European policy makers struggle to restore investor confidence. 
Talking Points
Euro: Greece To Receive Next Payment In November, All Eyes On Slovakia
British Pound: Halts Two-Day Rally, Sideways Price Action Ahead
Euro: Greece To Receive Next Payment In November, All Eyes On Slovakia
The Euro fell back from an overnight high of 1.3671 as European Central Bank President Jean-Claude Trichet talked up the risk for contagion and warned that the debt crisis has reached ‘systemic dimension.’ Moreover, Mr. Trichet encouraged the EU to act swiftly in recapitalizing the European banking system and stressed the importance of increasing the flexibility of the European Financial Stability Facility as the fundamental outlook for the euro-area turns increasingly bleak.
The EU, International Monetary Fund and the European Central Bank said Greece will receive its next bailout payment in early November after completing its fifth review of the economy, but warned that the 2011 fiscal target is no longer within reach, which will put increased pressures on the government to take additional budget-cutting measures in 2013-14. Nevertheless, all eyes are on Slovakia as lawmakers are scheduled to vote on broadening the powers of the EFSF, and the outcome is likely to sway market sentiment as European policy makers step up their efforts to address the debt crisis. However, it seems as though the EUR/USD has carved out a short-term top just below 1.3700, and the single-currency may consolidate over the near-term as market participants still see the ECB scaling back the benchmark interest rate from 1.50%. Bets for lower borrowing costs continues to dampen the outlook for the single-currency, and the euro-dollar may threaten the rebound from 1.3145 as the ongoing turmoil in Europe bears down on investor confidence.
British Pound: Halts Two-Day Rally, Sideways Price Action Ahead
The British Pound slipped to an overnight low of 1.5611 as market participants scaled back their appetite for risk, and the GBP/USD looks poised to face range-bound price action over the near-term as investors weigh the prospects for future policy. Indeed, the Bank of England stepped up its effort to shore up the ailing economy and increased its asset purchase program to GBP 275B, but the slowing recovery in the U.K. may lead the central bank to expand monetary policy further as the region faces an increased risk of a double-dip recession. With the BoE minutes on tap for the following week, it seems as though the pound-dollar will trend sideways over the coming days, and the slew of economic event risk scheduled for the rest of the week may lead the GBP/USD to give back the rebound from 1.5273 as the fundamental outlook for Britain deteriorates. In turn, the MPC may keep the door open to expand monetary policy further, and the central bank may carry its easing cycle into the following year in an effort to encourage a sustainable recovery.