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Forex - EUR/USD slips below 1.4300 amid euro bond debate

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Forexpros - The euro pared gains against the U.S. dollar on Monday, easing off a three-day high after Germany's government spokesman said euro bonds will not be on the agenda when German Chancellor Angela Merkel and French President Nicolas Sarkozy meet on Tuesday.

EUR/USD pulled back from 1.4328, the pair's highest since August 10, to hit 1.4292 during European afternoon trade, still up 0.3% on the day.

The pair was likely to find short-term support at 1.4149, last Friday's low and resistance at 1.4400, the high of August 10.

German government spokesman Steffen Seibert said earlier that the German government would not consider the introduction of euro bonds as a viable option to solve the region's ongoing debt crisis.

"The German government has said on numerous occasions that it does not believe Eurobonds make sense and that's why they will not play any role at tomorrow's meeting," Seibert said.

Over the weekend, Italian Finance Minister Giulio Tremonti called for the creation of such bonds, saying, "We wouldn't be where we are now if we had had euro bonds."

Seibert added that markets should not expect a major breakthrough when Merkel and Sarkozy meet on Tuesday.

European Union Economic and Monetary Commissioner Olli Rehn said in an interview Monday that Italy, Spain and France will not need financial bailouts, as these countries are taking "the right steps" to balance their budgets.

Sentiment towards the single currency was also boosted after Italy's government approved EUR45.5 billon in deficit cuts in an effort to balance the budget and regain investor confidence.

Elsewhere, the euro was also up against the pound, with EUR/GBP adding 0.12% to hit 0.8766.

Later in the day, the U.S. was to produce official data on manufacturing activity in New York State and a report on the balance of domestic and foreign investment in the U.S.

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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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