EUR/USD falls to 2-week low due to debt crisis

   
article by Forexpros

The euro slid to a 2-week low against the U.S. dollar on Monday, as ongoing concerns over the European sovereign debt crisis continued and amid rising tensions on the Korean peninsula.

EUR/USD hit 1.3126 during late Asian trade, the pair’s lowest since December 2; the pair subsequently consolidated at 1.3163, shedding 0.19%.

The pair was likely to find support at 1.3059, the low of December 2 and resistance at 1.3358, last Friday’s high.

The euro remained under pressure after a five notch downgrade of Ireland’s sovereign debt by ratings agency Moody’s on Friday and after the International Monetary Fund warned of a "significant" contagion threat from Ireland.

European Union leaders agreed late last week to implement a permanent rescue fund for the region. However, leaders failed to agree on expanding the size of the existing bailout fund.

Meanwhile, earlier Monday, South Korea started a planned artillery firing drill, despite threats of attack by North Korea and pressure from Russia and China to cancel the exercise.

The euro was also down against the pound, with EUR/GBP shedding 0.17% to hit 0.8474.

Also Monday, official data showed that German producer price inflation rose less-than-expected in November.