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Forex - EUR/USD hits 4-month lows on Italy, Cyprus woes

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Investing.com - The euro fell to fresh four-month lows against the dollar on Wednesday, weighed down by worries over potential fallout from a last minute bailout for Cyprus and growing concerns over political deadlock in Italy.

EUR/USD hit 1.2782 during morning trade, the pair's lowest since November 21; the pair subsequently consolidated at 1.2791, shedding 0.54%.

The pair was likely to find support at 1.2699, the low of November 14 and resistance at 1.2866, the session high.

Investors remained concerned that the bailout deal for Cyprus could set a precedent for future bailouts in larger euro zone states, with big bank depositors and senior bond holders forced to suffer losses.

Meanwhile, worries over a political stalemate in Italy mounted after a leading Italian politician cast doubt on prospects for forming a new government.

The euro extended losses following media reports that Pier Luigi Bersani, the head of Italy's center-left alliance, ruled out forming a coalition government, saying that only an "insane person" would want to govern Italy.

Elsewhere, data showed that economic confidence across the euro zone declined this month, reversing four months of gains, reinforcing concerns over the economic outlook for the currency bloc.

The European Commission's economic sentiment index slumped by 1.1 points to 90.0, led lower by falling optimism among manufacturers.

The euro extended losses against the pound and the yen, with EUR/GBP down 0.23% to 0.8464 and EUR/JPY falling 0.66% to 120.66.

The U.S was to release private sector data on pending home sales later in the trading day.

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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.

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