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Forex - EUR/USD hits session low, remains supported

Published 02/27/2012, 10:33 AM
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Investing.com - The euro fell to a fresh session low against the U.S. dollar on Monday, as sentiment on the single currency soured after the Group of 20 nations pressured Germany to drop its opposition to increasing scale of the euro zone’s bailout fund.

EUR/USD hit 1.3367 during U.S. morning trade, the session low; the pair subsequently consolidated at 1.3393, shedding 0.41%.

The pair was likely to find support at 1.3356, Friday’s low and resistance at 1.3549, the high of December 2.

G-20 finance ministers postponed a decision on increasing the resources of the International Monetary Fund at a weekend meeting and said any decision on outside help will be conditional upon on European governments increasing the size of the region’s debt firewall.

Earlier in the day, German Chancellor Angela Merkel reiterated her opposition to enlarging the lending capacity of the region’s bailout funds beyond the current EUR500 billion limit.

The comments came ahead of a vote in Germany’s parliament on Greece’s second bailout, which was already approved by euro zone finance ministers last week.

Elsewhere Monday, ratings agency Moody’s said that while a second bailout for Greece was an important step forward, the risk of a default remained high.

But the euro found some support as markets looked ahead to a liquidity boosting operation by the European Central Bank, set to take place on Wednesday, after a similar operation in December eased pressure on peripheral bond markets.

The euro was lower against the pound and the yen, with EUR/GBP sliding 0.24% to hit 0.8453 and EUR/JPY tumbling 1.37% to hit 107.70.

Also Monday, the ECB announced that it had not purchased any euro zone government debt on the secondary bond market for the second consecutive week since it re-launched its bond purchasing program in August.

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