Investing.com – The euro was sharply lower against the U.S. dollar on Monday, tumbling to a new 2-month low as fears over sovereign debt contagion among peripheral euro zone nations decimated risk appetite.
EUR/USD hit 1.3064 during European afternoon trade, the pair’s lowest since September 21; the pair subsequently consolidated at 1.3091, plummeting 1.11%.
The pair was likely to find support at 1.2828, the low of September 14 and resistance at 1.3361, last Friday’s high.
Earlier in the day, the cost of insuring Spanish and Portuguese five-year sovereign debt credit-default swaps soared to euro-lifetime highs amid fears that the rescue fund created by the International Monetary Fund and the European Union could run out if either country were to follow Ireland in requesting a bailout.
On Sunday, European Union finance ministers endorsed a EUR85 billion loan package to prop up Ireland’s banking sector and economy. Ireland said the emergency loans would run for an average of seven and a half years, at an interest rate of 6%, lower than some had expected.
Sentiment was also dampened after an Italian government debt auction met with weak demand. Italy sold EUR6.837 billion of bonds Monday, only slightly below the maximum planned EUR7 billion, but paid higher yields than a month ago to sell the three- and 10-year bonds.
The euro was also down sharply against the pound, with EUR/GBP tumbling 0.81% to hit 0.8422.
Also Monday, the European Commission said that the euro zone’s economy will slow slightly next year as governments cut spending to win back financial market confidence, but private demand will give growth a fresh boost in 2012.
EUR/USD hit 1.3064 during European afternoon trade, the pair’s lowest since September 21; the pair subsequently consolidated at 1.3091, plummeting 1.11%.
The pair was likely to find support at 1.2828, the low of September 14 and resistance at 1.3361, last Friday’s high.
Earlier in the day, the cost of insuring Spanish and Portuguese five-year sovereign debt credit-default swaps soared to euro-lifetime highs amid fears that the rescue fund created by the International Monetary Fund and the European Union could run out if either country were to follow Ireland in requesting a bailout.
On Sunday, European Union finance ministers endorsed a EUR85 billion loan package to prop up Ireland’s banking sector and economy. Ireland said the emergency loans would run for an average of seven and a half years, at an interest rate of 6%, lower than some had expected.
Sentiment was also dampened after an Italian government debt auction met with weak demand. Italy sold EUR6.837 billion of bonds Monday, only slightly below the maximum planned EUR7 billion, but paid higher yields than a month ago to sell the three- and 10-year bonds.
The euro was also down sharply against the pound, with EUR/GBP tumbling 0.81% to hit 0.8422.
Also Monday, the European Commission said that the euro zone’s economy will slow slightly next year as governments cut spending to win back financial market confidence, but private demand will give growth a fresh boost in 2012.