Forexpros –
Forexpros – The euro edged lower against the U.S. dollar in Asian trade Thursday, continuing its sharpest fall in a year, as investors eyeing rising Italian government bonds feared the country could be the next victim of Europe’s debt crisis.
EUR/USD hit 1.3522 in early Asian trade, the pair’s lowest since October 10; the pair subsequently consolidated at 1.3529, falling 0.10%.
The pair was likely to find support at 1.3395, the low of October 10, and resistance at 1.3525, the high of October 7.
A day after the announced resignation of Italian Prime Minister Silvio Berlusconi Italian bonds rose above 7%, the same level at which Ireland, Portugal and Greece were forced to plead for rescue funds from international agencies.
The 17-nation common currency stumbled on fears that the new Italian government might not be strong enough to enact austerity measures promised to the European Union in exchange for financial assistance.
A new Italian government faces implementation of deficit reduction measures to help tackle the nation’s public debt, currently at 120% of gross domestic product, second to Greece among euro-zone members.
Prime Minister Berlusconi, Tuesday, said he would resign once parliament passed the austerity bill, a USD63 billion package that convinced the European Central Bank to buy Italian bonds in an effort to reduce borrowing costs.
Shares on Wall Street tumbled on the prospects of an Italian default, with the Dow Jones Industrial Average slumping 3.2% to 11,780.90, the Nasdaq Composite Index sank 3.9% to 2,621.65, and the S&P 500 plummeted 3.7% to close at 1,229.10.
European also posted sharp losses by the end of Wednesday trade, with France’s CAC surrendering 2.2% to 3,075.16, Britain’s FTSE 100 fell 1.9% to 5,460.38, while Germany’s DAX gave up 2.2% to 5,829.54.
Meanwhile, the euro was lower against both the British pound and the Japanese yen, with EUR/GBP down 0.07% to hit 0.8591, and EUR/JPY lower by 0.02% to hit 107.48.
The European Central Bank was scheduled to deliver its monthly economic report later Thursday.
Forexpros
