ForexNewsNow – The euro accentuated its decline against the US dollar on Monday, weakened by the let-down from the meeting of European ministers of finance over the weekend, which failed to reach any agreement on a new loan to Greece while the country remains under the threat of default.
The EUR/USD pair was trading at 1.3646 as of around 12:05 A.M., GMT. The popular currency pair is down 1.112% on the day and has reached a session high of 1.3722 with a low of 1.3634 thus far.
Last week, the EU’s single currency fell below the threshold of 1.3600 for the first time since February.
Over the weekend, European ministers postponed a decision made in October to initiate payment of a new tranche of 8 billion euros to Athens, despite the fact that the country desperately needs the money and is on the brink of bankruptcy.
“The presence of US Treasury Secretary Timothy Geithner did not change anything. For most market participants, the question is not whether or not Greece will default, but when and how this this default will occur,” said Jane Foley, an analyst at Rabobank.
“In this environment, the dollar (seen as a safer asset) is inevitably favored by investors, despite the sluggish US economy and the accommodative monetary policy,” led by the US Federal Reserve, the analyst added.
The results of the Fed’s Monetary Policy Committee meeting, which must decide on Wednesday what steps the US central bank apparatus will take to boost the US economy, will be closely scrutinized by forex analysts. In this context, the Fed’s decision could have a significant impact on the trading of the EUR/USD pair on Wednesday.
It’s worth noting that today’s decline of the European currency has already practically annihilated all of its gains from last week.