Forexpros – The euro extended losses against the U.S. dollar on Monday, tumbling more than 1% amid sustained concerns over European leaders handling of the debt crisis in the single currency bloc.
EUR/USD hit 1.3214 during U.S. morning trade, the pair’s lowest since October 4; the pair subsequently consolidated at 1.3216, tumbling 1.26%.
The pair was likely to find support at 1.3144, the low of October 4 and a10-month low and resistance at 1.3381, the session high.
European Union leaders agreed Friday to draft a new treaty to implement tighter fiscal consolidation across the euro zone and to provide EUR200 billion in loans to the International Monetary Fund to assist countries with debt problems.
But investors remained unsure over whether the measures would go far enough to resolve the debt crisis after the European Central Bank indicated that it had no plans to step up its bond purchasing program, capping weekly bond purchases at EUR20 billion.
Earlier Monday, Standard & Poor’s chief European economist said Friday’s agreement was a significant step in resolving a “crisis of confidence,” but warned that time is running out and more action is needed.
The comments came after S&P placed the credit ratings of 15 euro zone members, including France and Germany, on watch for a potential downgrade last week.
Sentiment on the single currency soured after Moody’s said it will review the ratings of all EU countries in the first quarter, saying Friday’s summit failed to deliver “decisive policy measures” to end the region’s debt crisis.
The euro was also sharply lower against the pound, with EUR/GBP falling 0.80% to hit 0.8472.
Also Monday, Italy’s Treasury sold the full targeted amount of EUR7 billion of 12-month government bonds at an average yield of 5.95% compared to 6.08% at a bond auction last month.
Following the auction, the yield on Italian 10-year government bonds climbed back towards the near unsustainable levels hit last month, rising to 7.18%.
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