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Forex - EUR/USD retreats in early Asian trade

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Forexpros - The euro extended losses against the U.S. dollar Monday, as dealers sought safe-haven positions in the greenback following the bloodbath on Wall Street that saw U.S. shares suffer their sixth worst drop in history.

EUR/USD hit 1.4187 during early Asian trade, the pair's highest since August 7; the pair subsequently consolidated at 1.4175, dropping 0.3%.

The pair was likely to find support at 1.4056, last Thursday's low, and resistance at 1.4426, August 7th's high.

U.S. stocks fell from the opening bell, as dealers reacted to the weekend decision by Standard and Poor's to downgrade the U.S. from top-notch credit rating due to continuing federal debt concerns.

The Dow Jones Industrial Average plunged 5.6% to 10,809.85, the Nasdaq Composite Index fell sharply by 6.9% to 2,357.69, and the S&P 500 sank 6.7% to 1,119.46.

The European Central Bank announced late last week that it would buy Italian and Spanish government bonds in an effort to prop up the two debt-threatened nations. But the ECB purchase plan failed to deliver relief to investors seeking to dump volatile equities..

Monday's stock market sell-off erased USD1.35 trillion in investor wealth worldwide, according to the 5.2%drop in the MSCI World Index.

The euro was higher against the British pound but down against the Japanese yen, with EUR/GBP adding 0.03% to hit 0.860 and EUR/JPY down by 0.17% to hit 110.06.

The U.S. Federal Open Market Committee was scheduled to discuss possible changes in the Fed's monetary policy and short-term interest rates on Tuesday.

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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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