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Forex - Euro hits session lows vs. dollar

Published 09/23/2013, 10:33 AM
Investing.com - The euro fell to session lows against the dollar on Monday after European Central Bank President Mario Draghi said the bank is ready to offer the European banking sector more help if necessary.

EUR/USD hit 1.3480 during U.S. morning trade, the lowest since September 18; the pair subsequently consolidated at 1.3489, down 0.23%.

The pair was likely to find support at 1.3450 and resistance at 1.3546, the session high.

The euro came under pressure after Draghi said the ECB is ready to launch a third round of Long Term Refinancing Operations if necessary. The comments came during testimony about the economy before the Committee on Economic and Monetary Affairs in Brussels.

Meanwhile, New York Federal Reserve President William Dudley defended the central bank’s decision to keep its stimulus program unchanged last week, in comments on Monday.

Dudley said that adjustments to the Fed’s USD85 billion-a-month asset purchase program "need to be anchored in an assessment of how the economy is actually performing”.

“The economy still needs the support of a very accommodative monetary policy,” Dudley added.

The Fed said last week that it wanted to see more evidence of a sustained economic recovery before it adjusted the scale of its bond buying program.

The decision surprised markets, which had been expecting a modest reduction to the scale of the bank’s bond buying program.

The euro drifted lower earlier after data showed that manufacturing output in the euro zone was weaker than expected this month, but this was offset by an improvement in service sector activity.

Data released on Monday showed that the preliminary reading of the euro zone manufacturing purchasing managers’ index fell to 51.1 in September from a final reading of 51.4 in August. Analysts had expected the index to inch up to 51.8.

However, the euro zone services PMI rose to 52.1, the highest level since June 2011, from 50.7 in August and above expectations for a reading of 51.1.

Germany’s manufacturing PMI fell to 51.3 in September from a final reading of 51.8 in August, compared to expectations for an improvement to 52.2.

The German services PMI rose to a seven month high of 54.4 from a reading of 52.8 in August. Analysts had expected the index to tick up to 53.1

The single currency remained supported after German Chancellor Angela Merkel's conservative party won general elections on Sunday, securing her a historic third term in office. Political party leaders were due to meet later Monday to discuss coalition talks.

The single currency fell to session lows against the pound and the yen, with EUR/GBP down 0.39% to 0.8414 and EUR/JPY falling 0.85% to 133.22.

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