Euro Edges Higher Against U.S. Dollar as Key Eurozone Summit Approaches

The euro edged a bit higher against the U.S. dollar on Wednesday, as the key Eurozone summit, aimed at relieving the debt crisis on the Eurozone periphery, approaches. At the moment, the euro added 0.3% to its value to trade around $1.4198. However, the Japanese yen was too strong for the euro in today's early trading as the euro lost 0.68% of its value to trade around ¥111.99. The euro has been fighting significant headwind caused by the debt crisis for months now. On Thursday, the Eurozone leaders are to converge onto Brussels to try to resolve the crisis. High on agenda will be Greece once more. After previously agreeing on a new bailout for the troubled Eurozone member, the Europeans need to agree on the precise format of the second bailout. Germany is trying to get the private sector to cover some of the costs of the debt crisis resolution. However, credit rating agencies have warned the Europeans that any “voluntary” increases in debt maturity or reductions in interest rates will be seen as a default. At this point, the Europeans cannot afford any of its members defaulting, as the domino effect would probably bring down a few other countries as well. German Chancellor Angela Merkel and French President Nicolas Sarkozy, the leaders of two most influential Eurozone members, are

to prepare for the Thursday's summit. It is obvious that there will be no agreement on Thursday without the support of the Berlin-Paris axis. Analysts will be watching closely to see if the two Eurozone powerhouses can reach the same position. It seems

of a definite agreement during tomorrow's summit by stating that nothing spectacular will be happening tomorrow. Tomorrow's summit will be a step in resolving the debt crisis, but many more steps will have to be made, claims the German leader. Germany is Europe's largest economy. For decades, Germany has also been the driver of the European integration process. Lately, many have started to doubt Germany's long-term commitment to the survival of the euro project. For instance, some analysts believe that the resolution of the Eurozone crisis lays in the formation of a fiscal union. However,

, argues that actions made by Chancellor Merkel and Jens Weidmann, the head of the German central bank, are steps in the opposite direction. It is becoming obvious that the Europeans cannot afford to keep the status quo for much longer. The euro project needs to be redefined substantially in order for the Eurozone to survive. One thing seems to be very clear; the European leaders desperately lack imagination and courage to make ground-breaking changes in the foundations of the Eurozone. Some analysts might find comfort in the recent price level data from Germany, which suggests inflation is easing in the Eurozone's main powerhouse. According to

, Germany's PPI in June was 5.6% higher than a year ago, down from 6.1% in May. The latest data will probably provide more ammunition to critics of the latest ECB decision to raise the interest rates to 1.5%. The ECB was worried that inflation might get out of hand, but data published after its decision to raise interest rates seems to suggest the inflation is coming down on its own. Unfortunately, interest rate hike made servicing debt for the troubled countries on the Eurozone periphery even more difficult.

Traders who believe that the European leaders can find a solution to the debt problems in the Eurozone periphery might want to consider the following trades:

Traders who believe that the Europeans will not be able to resolve Greece's debt problems and that a default in Greece will have devastating consequences for Spain, Portugal and other debt-ridden countries may consider an alternate positions: