Forexpros – The euro held on to modest gains against the U.S. dollar on Monday, as mounting fears over a U.S. default weighed on the greenback, after talks aimed at raising the country’s USD14.3 trillion debt ceiling broke down over the weekend.
EUR/USD hit 1.4418 during European early afternoon trade, the daily high; the pair subsequently consolidated at 1.4368, easing up 0.08%.
The pair was likely to find support at 1.4168, last Thursday’s low and short-term resistance at 1.4465, the high of July 6.
The U.S. Senate rejected a USD3 trillion deficit reduction plan on Friday, adding to fears over a possible sovereign debt downgrade or default ahead of the August 2 deadline to raise the country’s debt ceiling.
Both Moody’s Investors Service and Standard & Poor’s have placed their credit ratings on U.S. debt on review for a potential downgrade.
House Speaker John Boehner told Republican lawmakers on a conference call Sunday evening that no “grand deal” on raising the debt ceiling was possible with President Barack Obama.
Elsewhere, Moody’s cut Greece’s sovereign debt rating by three notches to Ca earlier Monday, just one notch above default, after euro zone leaders agreed on a new EUR159 billion aid package late last week.
The euro was also higher against the pound, with EUR/GBP rising 0.21% to hit 0.8826.
Meanwhile, White House Chief of Staff Bill Daley warned that there would be “a few stressful days” ahead for financial markets, in the event that the Congress fails to agree on a strategy by the end of Sunday.
Forexpros
