Investing.com - The euro moved modestly lower against the U.S. dollar in Asian trade Tuesday, as a looming fresh Greek government and encouraging remarks from a European Central Bank official helped lift prospects for a near solution to the euro-zone’s debt woes.
EUR/USD hit 1.3766 in early Asian trade, the pair’s lowest since Friday; the pair subsequently consolidated at 1.3769, falling 0.07%.
The pair was likely to find support at 1.3654, last Wednesday’s low, and resistance at 1.3867, last Friday’s high.
Over the weekend, Greek Prime Minister George Papandreou agreed to resign, leaving the door open for the creation of a new government that could better secure international funds and avoid default on the country’s debt.
On Monday, Greece’s Finance Minister Evangelos Venizelos held talks with European Union Economic and Monetary Affairs Commissioner Olli Rehn to negotiate payment of Greece’s next tranche of financial aid.
European finance officials met in Brussels on plans to expand the European Financial Stability Facility, the rescue fund for debt-threatened euro-zone members.
Also Monday, European Central Bank executive board member Juergen Stark predicted that the region’s debt crisis could be under control within two years, to a point where political action would not longer be needed.
Meanwhile, rumors continued to circulate that Italian Prime Minister Silvio Berlusconi would be the next European leader to step down, as 10-year Italian bonds surged to their highest level since the launch of the single-currency euro.
Optimism on European economic growth was muted by the release of industrial production figures in Germany, which fell more than expected in September to a seasonally adjusted 2.7%. Market expectations were for a 0.7% decline for the month.
Wall Street dealers took a generally positive view of events in Europe, with the Dow Jones Industrial Average gaining 0.71% to 12,068.40, the Nasdaq Composite Index added 0.34% to 2,695.25, and the S&P 500 rose 0.63% to close at 1,261.12.
European stocks posted losses by the end of Monday trade, with France’s CAC retreating 0.64% to 3,103.60, Britain’s FTSE 100 dropped 0.30% to 5,510.82, while Germany’s DAX fell 0.63% to 5,928.68.
Meanwhile, the euro was lower against both the British pound and the Japanese yen, with EUR/GBP down 0.07% to hit 0.8573, and EUR/JPY lower by 0.03% to hit 107.46.
Trade balance figures from the euro-zone’s two largest economies, Germany and France were due for release later Tuesday.