Investing.com – The euro extended losses against the U.S. dollar on Wednesday, falling to a one-month low after Italian borrowing costs rose to near unsustainable levels, sparking fears that the country will need to seek international financial assistance.
EUR/USD hit 1.3555 during U.S. morning trade, the pair’s lowest since October 10; the pair subsequently consolidated at 1.3562, plunging 1.95%.
The pair was likely to find support at 1.3377, the low of October 10 and resistance at 1.3697, the high of October 10.
The euro was sold off after the yield on two-year and 10-year Italian government bonds climbed above the 7% threshold which prompted Greece, Ireland, and Portugal to seek international bailouts, after a Paris based clearing house hiked the margin call on Italian bonds.
The move came after Italian Prime Minister Silvio Berlusconi announced late Tuesday that he would step down after parliament approves next year’s budget, but uncertainty remained over whether Italy’s new government will be able to shore up growth and implement austerity measures.
Meanwhile, officials in Greece were scrambling to name a new prime minister, as efforts continued to avert an imminent default by implementing a new bailout program.
The euro was also sharply lower against the pound, with EUR/GBP tumbling 0.84% to hit 0.8523.
Also Wednesday, a spokesman for German Chancellor Angela Merkel said Germany was concerned about recent developments in financial markets and is watching developments in Italy with "great interest."
EUR/USD hit 1.3555 during U.S. morning trade, the pair’s lowest since October 10; the pair subsequently consolidated at 1.3562, plunging 1.95%.
The pair was likely to find support at 1.3377, the low of October 10 and resistance at 1.3697, the high of October 10.
The euro was sold off after the yield on two-year and 10-year Italian government bonds climbed above the 7% threshold which prompted Greece, Ireland, and Portugal to seek international bailouts, after a Paris based clearing house hiked the margin call on Italian bonds.
The move came after Italian Prime Minister Silvio Berlusconi announced late Tuesday that he would step down after parliament approves next year’s budget, but uncertainty remained over whether Italy’s new government will be able to shore up growth and implement austerity measures.
Meanwhile, officials in Greece were scrambling to name a new prime minister, as efforts continued to avert an imminent default by implementing a new bailout program.
The euro was also sharply lower against the pound, with EUR/GBP tumbling 0.84% to hit 0.8523.
Also Wednesday, a spokesman for German Chancellor Angela Merkel said Germany was concerned about recent developments in financial markets and is watching developments in Italy with "great interest."