Forex Market Review – Euro weakens as markets take caution ahead of key events

Important: This page is part of archived content and may be outdated.

The euro slid against the dollar in Asian trading as the rally from the past two days ran out of steam and investors are taking caution ahead of the European Central Bank meeting due on Thursday and Spanish and Italian bond auctions as well.

Also later in the day, the focus will be on a meeting between German Chancellor Angela Merkel and Italian Prime Minister Mario Monti to discuss how to improve Italy’s debt situation.  Depending on possible comments by Germany on Italy’s plans could affect the euro today. Fitch Ratings said earlier this week that  Italy is the biggest threat to instability in the euro-zone in 2012 and is at risk of a downgrade.

EURUSD opened in Asia at 1.2776 and touched a low of 1.2727.

The negative view on the euro was also seen against other major currencies.  Against the yen, the euro dipped 0.2 percent to  97.91, not far from an 11-year low of 97.26 set on Monday

The single currency was also sold against commodity currencies. Euro moved close towards the all-time low versus the New Zealand dollar, with EURNZD touching 1.6030 and a one-year low against the Canadian dollar, with EURCAD at 1.2947.

Against the Australian dollar, the euro stood at A$1.2374, near a record low around 1.2359 hit on Tuesday.

The ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at about 81.051 from 80.862.