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The EUR/USD continues to sustain buying interest on every dip, and enters the European session around the key 1.28 level. The pair's strong performance comes after risk sentiment was boosted on speculation that over EUR 44 billion in financial assistance will be approved to Greece by December 5, a headline still eclipsing Moody's decision to downgrade France from Aaa to Aa1 after the last NY close.

Offering his view on the downgrade to France, Westpac FX strategist Sean Callow, noted:

While this only brings Moody's rating into line with S&P which made the same move in January, it is still a fresh negative, especially with Moody's maintaining a negative outlook due in part to skepticism that the government will deliver on promised reforms.

According to FXWW Founder Sean Lee,

Moody's are only following the lead of other ratings agencies so there should be no dramatic impact in terms of asset movements.

When and how Greece will get its next tranche of bailout payment remains officially unknown, yet investors will have a chance to shed a light today as euro area finance ministers will meet in Brussels to discuss the aid to the ailing country. Talks are expected to commence around 16.00 GMT.

According to Kathy Lien, Founder at BKAssetManagement:

Even though many countries believe that a decision will be made, we are skeptical because the European Union and the IMF have yet to reach an agreement on key issues.

Ms. Lien considers two main scenarios for today:

One option would be a partial aid payment which could help boost the euro in the short term but hurt it in the long term because the can would be kicked further down the road. If no agreement is reached today (very likely) and Moody's downgrade hangs over the euro, we could see the currency trade back to its November lows.

Rabobank FX Strategist Jane Foley, argues

It is hoped that the officials will be in a position to sign off on the next tranche of Greece's bail-out money. This may be worthy of another small boost to risk appetite this week.

Despite that Ms. Foley believes more upside potential is possible in the short term, she expects that this will limited. "We would favor selling rallies towards the 200 day sma at EUR/USD 1.2808" she notes.

Technically, Valeria Bednarik, Chief Analyst at FXstreet.com, says that the 4 hours chart, which usually captures sentiment quite accurately, "technical readings favor the upside, pointing for further advances this Tuesday, with the 1.2880/90 area now [in] sight" she notes.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Source: EUR/USD Holds 1.28; Greece Aid Hopes Outweigh France Downgrade