Forexpros –
Forexpros – The euro fell to an eight-month low against the U.S. dollar in early trade Friday, following the resignation a of key European Central Bank official and renewed fears over a worsening of Europe’s sovereign debt crisis.
EUR/USD hit 1.3698 in early U.S. trade, the pair’s lowest since February 23; the pair subsequently consolidated at 1.3659, falling 1.59%.
The pair was likely to find support at 1.3526, the low of February 22, and resistance at 1.4150, Wednesday’s high .
Earlier Friday, European Central Bank Governing Council member Juergen Stark, told ECB President Jean-Claude Trichet he would be leaving his post on the six-member Executive Board for “personal reasons.”
Last month, it was widely reported that Stark was opposed to the ECB’s resumption of its bond-buying program where it purchased large amounts of Spanish and Italian debt in an effort to curb the spread of debt contagion in the euro-zone.
Trichet admitted in August that the central bank had not voted unanimously to resume bond purchases but that an “overwhelming majority” of the 23-member Governing Council had approved the move.
European markets dropped sharply on the news; in late trade France’s CAC was down 2.84% to 2,997.92, Britain’s FTSE 100 fell 1.68% to 5,250.45 and Germany’s DAX was sharply lower by 3.25% to 5,232.69.
Wall Street was equally unnerved by Stark’s resignation and the wider implications for Europe’s debt woes. The Dow Jones Industrial Average sank 2.21% to 11,047.24, the Nasdaq Composite Index lost 1.54% to 2,489.35, and the S&P 500 surrendered 2.03%. to 1,162.11.
Investors remained skeptical that U.S. President Barack Obama’s USD447 billion economic stimulus proposal, announced Thursday evening, would be able to secure passage in Congress.
Meanwhile, the euro was lower against both the British pound and the Japanese yen, with EUR/GBP down by 1.1% to hit 0.8602, and EUR/JPY falling 1.83% to hit 105.65.
A meeting of G-7 finance ministers in Marseilles, France was scheduled to conclude later Friday.
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