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Forex - EUR/USD hits 3-day low as debt plan hopes recede

Published 10/18/2011, 03:31 AM
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Investing.com – The euro was down against the U.S. dollar for a second day on Tuesday, as expectations for a breakthrough in resolving the euro zone debt crisis at an upcoming summit receded, while data showing that growth in China slowed also weighed on sentiment.

EUR/USD hit 1.3688 during late Asian trade, the pair’s lowest since October 13; the pair subsequently consolidated at 1.3691, shedding 0.31%.

The pair was likely to find support at 1.3582, the low of October 12 and resistance at 1.3913, Monday’s high and a one-month high.

Hopes for a comprehensive solution to the euro zone's financial woes were quashed on Monday after Germany’s Finance Minister Wolfgang Schaeuble said the October 23 European Union summit would not provide a "definitive solution" to the region's debt crisis.

The euro hit a one-month high on Monday after Germany and France pledged to unveil a comprehensive package by the end of the month to resolve the euro zone's debt crisis, including an agreement on how to recapitalize banks.

Elsewhere, official data showed that China's third-quarter gross domestic product grew 9.1% from a year earlier, after expanding by 9.5% in the previous quarter. Analysts had expected growth of 9.3% in the third quarter.

The euro was also lower against the pound, with EUR/GBP shedding 0.25% to hit 0.8703.

Also Tuesday, Moody's Investors Service put France on three months notice that "pressure from weaker debt metrics," could leave the country with a negative credit outlook and could result in a downgrade.

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