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Forex - EUR/USD drops below 1.4360 as risk appetite fades

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Forexpros - The euro extended earlier losses against the U.S. dollar on Thursday, slumping to a fresh daily low as mounting concerns over global economic growth prospects boosted demand for the safe haven greenback.

EUR/USD hit 1.4351 during European afternoon trade, the daily low; the pair subsequently consolidated at 1.4359, falling 0.46%.

The pair was likely to find support at 1.4250, the low of August 15 and short-term resistance at 1.4516, Wednesday's high and a three-week high.

Concerns over the global economic outlook were exacerbated after Wall Street investment bank Morgan Stanley cut its outlook for global economic growth for 2012, citing an "insufficient policy response to Europe's sovereign debt crisis, weakened confidence and the prospect of fiscal tightening".

The investment bank added that the U.S. and Europe are "dangerously close to recession."

The downbeat growth outlook prompted Morgan Stanley to forecast a rate cut by the European Central Bank in 2012, reversing previous expectations for a rate hike.

Meanwhile, European Central Bank Governing Council member Ewald Nowotny said that he was more concerned about entering a phase of slow growth and low inflation than the risks posed by high inflation.

Nowotny added that growth in the U.S. was likely to continue, albeit at a more modest pace than previously expected.

The euro found brief support earlier, spiking to a daily high of 1.4451 before falling back after ratings agency Standard & Poor's affirmed France's AAA credit rating with a stable outlook, easing fears the euro zone's second largest economy would lose its top-tier rating.

Elsewhere, the euro was also down against the pound, with EUR/GBP shedding 0.07% to hit 0.8714.

Later in the day, the U.S. was to publish a flurry of economic data, which will help traders gauge the strength of the U.S. economic recovery.

The country was to produce government reports on initial jobless claims, consumer price inflation, existing home sales, manufacturing activity in Philadelphia as well as a report on natural gas stockpiles.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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