After a Sunday vote in France opened up the presidential race, Dutch Price Minister Mark Rutte on Monday tendered his government's resignation in a crisis over budget cuts, creating a political vacuum in one of the euro zone's most stable nations.
Data showing the euro zone's business slump deepened at a far faster pace than expected in April further undermined risk appetite, sending U.S. stocks down over 1 percent and European equities to a three-month low on Monday.
"Fragmented euro zone politics over austerity implementation is quickly becoming the disorder of the day," said Ashraf Laidi, chief global strategist at City Index.
The euro inched down 0.1 percent at $1.3147, slipping further away from a two-week high of $1.3225 reached on Friday. The yen held firm against the dollar at around 81.10 yen.
"Overall, currency markets are in 'risk off' mode. That is to say, while the euro has not weakened that much (bearing in mind it is at the centre of the problem), the yen is stronger and higher-beta currencies softer across the board,"
With concerns over sovereign debt restructuring rising, Dutch and peripheral euro zone bonds sold off on Monday, driving Spanish yields back above 6 percent and taking the spread of Dutch bonds over German benchmarks to the highest in three years.
Today's support: - 1.3137(main), where correction is possible. Break would give 1.3112, where correction also may be. Then follows 1.3082. Break of the latter would result in 1.3061. If a strong impulse, we would see 1.3047. Continuation will give 1.2984 and 1.2963.
Today's resistance: - 1.3237(main). Break would give 1.3264, where a correction is possible. Then goes 1.3272. Break of the latter would result in 1.3293. If a strong impulse, we'd see 1.3326. Continuation will give 1.3362.
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