Forex – EUR/USD rebounds in early Asian trade

Forexpros – The euro moved higher against the U.S. dollar in Asian trade Tuesday, after EUR/USD hit an eight-month, intra-day low following Greece’s announcement it would not be meeting its deficit target this year, renewing fears the country was facing imminent default.

EUR/USD hit 1.3206 in early Asian trade, the pair’s highest since Monday; the pair subsequently consolidated at 1.3199, rising 0.17%.

The pair was likely to find support at 1.3089, the low of January 13, and resistance at 1.3369, Monday’s high.

The greenback has risen 6.8% versus the euro so far in the month of September.

Earlier Monday, the Greek government announced its 2011 fiscal deficit would total 8.5% of gross domestic product, well short of the 7.6% target set out by European finance officials as a prerequisite to obtaining a new round of rescue funds.

Officials from the so-called troika–the European Union, European Central Bank and the International Monetary Fund, were meeting in Greece to decide on the disbursement of a new tranche of funds, which Greece desperately needs in order to avoid default on its obligations in the coming weeks.

Adding to negative sentiment for the 17-member common currency, Jean-Claude Juncker, head of the Eurogroup meeting of finance ministers, said Monday the group will not yet make a scheduled decision on the next round of bailout payments to Greece.

The decision was delayed last month until Greece could be determined as having met all conditions for additional financial aid.

European shares ended Monday’s session lower; France’s CAC declined 1.85% to 3,926.83, Britain’s FTSE 100 fell 1.03% to 5,075.50, while Germany’s DAX was lower by 2.28% to 5,376.70.

Later Monday, the U.S. Institute for Supply Management reported that its Manufacturing Purchasing Managers Index rose 51.6 in the month of September, up from 50,6 the previous month.

Market expectations were for the index to register 50.5 for the period.

Indications of increased U.S. manufacturing activity were not enough to save Wall Street issues from posting steep drops by the end of the Monday session; The Dow Jones Industrial Average fell 2.36% to 10,655.30, the Nasdaq Composite Index sank 3.29% to 2,335.83, while the S&P 500 surrendered 2.85% to 1,099.23.

Meanwhile, the euro was higher against both the British pound and the Japanese yen, with EUR/GBP up 0.11% to hit 0.8548, and EUR/JPY lifted by 0.13% to hit 101.07.

U.S. Federal Reserve Chairman Ben Bernanke was scheduled to testify before the Joint Economic Committee in Washington D.C. later Tuesday.