Forexpros – The euro traded lower against the U.S. dollar Monday, as the Group of 20 nations denied requests from the euro zone to increase International Monetary Fund’s lending capacity without Germany’s cooperation
EUR/USD traded at 1.3408 during mid U.S. trade down 0.31%. The pair hit a high of 1.3480 and a low of 1.3367 during the trading session.
The pair was likely to find support at 1.3356 Friday’s low and technical resistance exists at 1.3549, the high of December 2.
Euro zone finance ministers and central bankers met in Mexico and urged G-20 nations to find additional funds that the IMF could provide to the euro zone.
IMF Managing Director, Christine Lagarde stated at the meeting that she wants to increase the fund’s lending capacity by USD500 billion to protect the global economy from further shocks.
However, the G-20 leaders told the euro zone to provide more financial strength before they would consider providing support.
The primary onus fell on Germany, which is already the largest national contributor to the bailouts.
Hurting the single currency sentiment, German Chancellor, Angela Merkel said there is no need to increase the lending capacity of the euro zone’s bailout fund, pointing to lowered borrowing costs as evidence.
In Greek news, Germany’s parliament is holding a vote on the second Greek bailout package in Berlin today.
The country needs to decide if it will back plans at a March 1-2 European Union summit to combine rescue funds for the euro zone and create a EUR750 billion financial firewall.
Elsewhere Monday, Moody’s further depressed euro zone sentiment by stating that a second Greek bailout was an important step, the risk of default remains high regardless.
The euro found support as markets anticipate a liquidity boosting operation by the European Central Bank on Wednesday, following a similar operation in December that eased bond market pressure.
The ECB also announced that it had not purchased any euro zone sovereign debt on the secondary bond market for the second week since it re launched its bond purchasing program in August.
The euro was slightly lower against the pound and higher against the yen, with EUR/GBP easing down 0.13% to hit 0.8463 and EUR/JPY plunging 1.44% to hit 107.64.
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