Forexpros — The euro was down for a seventh day against the safe haven Swiss franc on Monday, falling to a fresh record low after Italian and Spanish bond yields jumped, adding to fears over sovereign debt contagion in the euro zone.
EUR/CHF hit 1.1401 during European morning trade, the pair’s all-time low; the pair subsequently consolidated at 1.1466, shedding 0.64%.
The pair was likely to find short-term support at 1.1401, the daily low and the all-time low and resistance at 1.1597, Friday’s high.
Euro zone finance ministers were to meet Thursday to focus on “the financial stability of the euro area as a whole and the future financing of the Greek program,” according to the president of the European Council, Herman Van Rompuy.
The second summit in less than a month follows a worsening of the crisis that pushed Italy to the attention of investors and drove bond yields to euro-lifetime highs across Europe’s most indebted nations.
Italian and Spanish government bond yields came under pressure on Monday, with Italian bonds climbing to 5.85% and Spanish yields up to 6.24%, approaching the 7% mark that prompted peripheral euro zone nations, Greece, Portugal and Ireland to seek bailouts.
Meanwhile, European Central Bank President Jean-Claude Trichet reiterated his opposition to any restructuring of Greek debt and said that the ECB would not accept as collateral bonds from a nation that defaults.
In an interview with Financial Times Deutschland, Trichet said, “If a country defaults, we can no longer accept as normal eligible collateral defaulted bonds issued by the government of that country because in the eyes of the Governing Council, this would impair our ability to be an anchor of confidence and stability.”
The euro was also lower against the U.S. dollar, with EUR/USD slumping 0.85% to hit 1.4033.
Later in the day, the U.S. was to publish a government report on the balance of domestic and foreign investments.
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