Forex – EUR/USD sags in early Asian trade

Forexpros – The euro moved lower against the U.S. dollar in Asian trade Wednesday, following reports that European finance officials were prepared to take additional steps in order to assuage market fears that Greek bankruptcy was inevitable.

EUR/USD hit 1.3324 in early Asian trade, the pair’s highest since Monday; the pair subsequently consolidated at 1.3336, falling 0.17%.

The pair was likely to find support at 1.3089, the low of January 13, and resistance at 1.3369, Monday’s high.

Earlier Tuesday, finance officials from the European Union were reported studying ways to coordinate a recapitalization of regional financial institutions, conceding that not enough had been done to reassure investors that European banks would remain solvent.

“There is an increasingly shared view that we need a concerted, coordinated approach in Europe. There is a sense of urgency among ministers and we need to move on,” said Olie Rehn, European commissioner for economic affairs.

Elsewhere, Tuesday U.S. Federal Reserve Chairman Ben Bernanke said the Fed may begin a new lending program to address a potential threat to the U.S. financial system if Europe’s debt crisis worsens.

“We would make sure we would stand ready to provide as much liquidity against collateral as needed as lender of last resort for our banking system,” Bernanke said during testimony with the Joint Economic Committee of Congress.

Bernanke added that the U.S. economic recovery was “close to faltering” and that legislators should refrain from fiscal policies that retard growth.

Wall Street shares managed an impressive late session rally on news from Europe, with the benchmark Dow Jones recovering from as much as 200 points lower.

The Dow Jones Industrial Average added 1.44% to 10,808.70, the Nasdaq Composite Index rose 2.95% to 2,404.82, and the S&P 500 was lifted 2.25% to end the day at 1,123.95.

Earlier, European stocks ended down for a second day, with France’s CAC declining 2.61% to 2,850.55, Britain’s FTSE 100 fell 2.58% to 4,944.44, while Germany’s DAX was lower by 2.98% to 5,216.71.

Also on Tuesday, Eurostat reported that inflation in the euro-zone fell less than expected in August with the producer price index easing 0.1% for the month after a 0.5% increase in July.

Market expectations were for the PPI to fall by 0.2% for the period.

Meanwhile, the euro was lower against both the British pound and the Japanese yen, with EUR/GBP down 0.07% to hit 0.8612, and EUR/JPY lower by 0.33% to hit 102.18.

Monthly figures for U.S. non-farm employment were due out from the U.S. Department of Labor later Wednesday.