Forex – EUR/USD edges lower in early Asian trade

Forexpros – The euro moved lower against the U.S. dollar in Asian trade Wednesday, after an earlier bump provided by the reported resignation of Italian Prime Minister Silvio Berlusconi.

EUR/USD hit 1.3827 in early Asian trade, the pair’s lowest since Monday; the pair subsequently consolidated at 1.3830, falling 0.05%.

The pair was likely to find support at 1.3654, last Wednesday’s low, and resistance at 1.3867, last Friday’s high.

On Tuesday, Italy’s Parliament approved a routine budget proposal, with opposition lawmakers abstaining, but leaving Berlusconi short of an absolute majority and facing an imminent confidence vote unless the prime minister were to step down.

The vote was widely expected to be a referendum on Berlusconi’s prime ministership and reports late Tuesday said he had signaled a willingness to resign.

European market watchers predict that a new Italian government may be better equipped to enact deficit reduction measures to help tackle the nation’s public debt, currently at 120% of gross domestic product, second to Greece among euro-zone members.

Italy, the third largest economy in the euro-zone is also home to the world’s third largest bond market, and its 10-year bond yields have risen to record highs in recent days, prompting fears that the country could become the next victim of the European debt crisis.

Meanwhile, U.S. consumer confidence rose less than expected, in November, according to a report Tuesday from Investor’s Business Daily and TechnoMetrica Market Intelligence.

The IBD/TIPP Economic Optimism Index rose by 0.3 points to 40.6 in November, after registering a 40.3 reading in October. Market expectations were for the index to gain 0.8 points to 41.1 for the month.

Events in Italy helped to lift share prices on Wall Street Tuesday, with the Dow Jones Industrial Average gaining 0.84% to 12,170.20, the Nasdaq Composite Index added 1.2% to 2,727.49, and the S&P 500 rose 1.17% to close at 1,275.92.

European stocks posted gains by the end of Tuesday trade, with France’s CAC advancing 1.28% to 3,143.30, Britain’s FTSE 100 was lifted 1.03% to 5,567.34, while Germany’s DAX rose 0.55% to 5,961.44.

Meanwhile, the euro was lower against both the British pound and the Japanese yen, with EUR/GBP down 0.07% to hit 0.8591, and EUR/JPY lower by 0.02% to hit 107.48.

U.S. Federal Reserve Chairman Ben Bernanke was scheduled to deliver a speech at a meeting on small business and economic recovery in Washington D.C. later Wednesday.