Forexpros – The euro extended losses against the U.S. dollar on Tuesday, as concerns over Greece’s ability to complete a debt swap deal and fresh worries over the outlook for the global economy weighed on risk appetite.
EUR/USD hit 1.3114 during U.S. morning trade, the pair’s lowest since February 17; the pair subsequently consolidated at 1.3124, dropping 0.70%.
The pair was likely to find support at 1.3043, the low of February 15 and resistance at 1.3225, the session high.
Concerns over the risk of a default by Greece mounted ahead of the March 8 deadline for the country’s private creditors to sign on to a EUR106 billion debt swap deal, a requirement for Athens to tap a recently approved EUR130 billion bailout fund.
Earlier in the day, Greek finance minister Evangelos Venizelos strongly urged private sector creditors to take part in the debt swap deal and warned that it was the best offer they would receive.
Adding to the negative tone, data earlier confirmed that the euro zone’s gross domestic product shrank by a seasonally adjusted 0.3% in the last three months of 2011, in line with expectations and unchanged from a preliminary estimate.
Annualized GDP contracted at a rate of 0.7%, also in line with expectations and unrevised from an initial estimate.
The data fuelled concerns over the outlook for global growth, coming one day after Chinese Premier Wen Jiabao said his government will target expansion of 7.5% in 2012, the lowest GDP target in eight years.
Elsewhere, the euro fell sharply against the broadly stronger yen, with EUR/JPY tumbling 1.48% to hit 106.18, and dipped against the pound, with EUR/GBP inching down 0.04% to hit 0.8325.
Also Tuesday, the Reserve Bank of Australia left its benchmark interest rate unchanged at 4.5% in a widely expected decision, but failed to outrule the possibility of further rate cuts if global economic conditions weaken going forward.
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