Forexpros – The euro extended losses against the U.S. dollar on Wednesday, tumbling to a 16-month low as investors exited the single currency amid renewed concerns over the sovereign debt crisis in the euro zone.
EUR/USD hit 1.2665 during U.S. morning trade, the pair’s lowest since September 10, 2010; the pair subsequently consolidated at 1.2678, tumbling 0.77%.
The pair was likely to find support at 1.2587, the low of August 24 2010 and resistance at 1.2789, the session high.
The euro’s losses came after Fitch Ratings said the European Central Bank needs to do more to prevent the collapse of the euro, saying the bank should step up its bond purchasing program to support troubled euro zone states.
Elsewhere, revised data showing that the euro zone’s economy grew less than initially expected in third quarter of 2011 underscored fears over impact of the region’s financial crisis on the outlook for growth.
Eurostat said that the euro zone’s gross domestic product rose by a seasonally adjusted 0.1% in the third quarter, down from a preliminary estimate of 0.2% and slowing from growth of 0.8% in the preceding quarter.
Markets were also jittery ahead of Thursday’s ECB policy meeting and government bond auctions by Spain and Italy later in the week.
The euro briefly trimmed losses earlier after German Chancellor Angela Merkel said Germany would be prepared to pay more capital into the European Stability Mechanism fund when it is launched later this year, before resuming its decline.
Meanwhile, the euro was almost unchanged against the pound, but fell against the yen, with EUR/GBP easing up 0.04% to hit 0.8255 and EUR/JPY falling 0.55% to hit 97.64, just off Monday’s 11-year low of 97.26.
Also Wednesday, Italian Prime Minister Mario Monti has said his country has enacted painful reforms and should no longer be seen as a “possible source of contagion for Europe”.
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