Forexpros – The euro extended gains against the U.S. dollar on Monday, amid fresh hopes for an agreement to stem the euro zone’s debt crisis after French and German leaders said they favored a treaty change in order to enforce stricter budget rules.
EUR/USD hit 1.3486 during U.S. morning trade, the daily high; the pair subsequently consolidated at 1.3474, gaining 0.62%.
The pair was likely to find support at 1.3362, Friday’s low and resistance at 1.3549, Friday’s high and an eight-day high.
French President Nicolas Sarkozy and German Chancellor Angela Merkel said they favored a change to European Union treaties to enshrine fiscal discipline and restore investor confidence in the single currency zone.
They said they wanted to impose automatic sanctions on countries which breach the rule on deficits of more than 3% of gross domestic product.
“We’re going full steam ahead to re-establish confidence in the euro and the euro zone,” said Mr. Sarkozy.
Their proposals will be discussed at an EU summit meeting scheduled to take place in Brussels on Thursday and Friday.
The euro found support earlier after Italian Prime Minister Mario Monti unveiled a EUR30 billion package of austerity measures, designed to reduce the second-biggest debt load in the single currency bloc.
The single currency shrugged off data showing that service sector activity in the U.S. declined unexpectedly in November, slumping to the lowest level since January 2010.
The Institute of Supply Management said its non-manufacturing purchasing manager’s index fell by 0.9 points to 52.0 last month, from 52.9 in October.
Analysts had expected the PMI to rise by 0.5 points to 53.4 in November.
A separate report showed that U.S. factory orders declined more-than-expected in October, falling for the second consecutive month.
Elsewhere, the euro was almost unchanged against the pound, with EUR/GBP dipping 0.01% to hit 0.8584.
Also Monday, official data showed that retail sales in the euro zone rose more-than-expected in October, advancing 0.4% after a 0.6% decline the previous month.
Analysts had expected retail sales to rise 0.2% in October.
Forexpros
