The euro is down almost 1 percent on the day against the US dollar, falling to a low of 1.3253 by 10:28 GMT versus the Asian session open of 1.3379.
Risk aversion is high today as the market sentiment was dampened by Moody’s saying that the EU accord reached at the Summit last Friday was “too little too late”. The ratings agency said that the extra measures announced by European policymakers offered little that was new.
Moody’s believes the lack of commitment from the European Central Bank to increase bond purchases from highly-indebted euro zone countries is putting pressure on the euro.
At the EU Summit last week, the ECB announced it is capping its weekly bond purchases at 20 billion euros and was not considering any more substantial action.
“There is a deflated feeling for the euro this morning after the EU summit. People were looking for a greater response and more importantly the ECB refused to significantly step up their bond buying,” said Beat Siegenthaler, currency strategist at UBS.
Moody’s said it will still put all euro zone countries under review during the first quarter of next year.
“The announced measures therefore do not change Moody’s previously expressed view that the crisis is in a critical and volatile stage, with sovereign and bank debt markets prone to acute dislocation which policymakers will find increasingly hard to contain,” Moody’s said in a statement.