Forexpros –
Forexpros – The euro dropped sharply against the U.S. dollar on Monday. Concerns that the European summit meeting did not accomplish anything of merit combined with the refusal of the European Central Bank to commit to additional bond purchases sent the single currency sliding lower.
EUR/USD hit a low of 1.3177 during mid session U.S. trade. The pair subsequently bounced to trade at 1.3203 later in the trading session, giving back 1.46%.
The pair was likely to find support at 1.3172 and technical resistance exists at 1.3209.
Despite European Union leaders agreeing to draft a new treaty implementing tighter fiscal controls and provide EUR200 billion to the International Monetary Fund to bail out struggling economies, investors remain pessimistic about the euro zone.
The European Central Bank’s failure to take aggressive action added to the bearish nervousness.
Pouring fuel on the selling, rating agency Moody’s made it clear it plans to review the credit ratings of euro zone nations. This is in response to Friday’s summit failure to take aggressive action.
Phillip Gijels, head of research of BNP Paribis Fortis Global Markets, explained to CNBC, “The austerity measures will have a profoundly negative impact on economic growth and will make 2012 a very challenging year in economic terms.”
The Euro was also lower against the pound with EUR/GBP dropping 0.92% to hit 0.8464.
Investors are awaiting the U.S. Fed Fund Rate and U.S. Retail Sales figures Tuesday.
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