Euro Hovers Near $1.36

The euro and pound hit seven-month lows against the dollar as renewed fears about the euro zone's debt crisis pushed investors toward the dollar.
The common currency continued to suffer from the surprise resignation on Friday of Jürgen Stark from the European Central Bank's policy-making body, and comments Monday from German Economy Minister Philipp Rösler that Europe could no longer rule out an "orderly default" for Greece, contributed to the gloom.

"At present the euro is under pressure on two fronts: the deteriorating debt crisis on the one hand and the European Central Bank which has become excessively entangled in the resolution of the crisis on the other," currency strategists at Commerzbank AG wrote in a note to clients. "There is no solution in sight."

Midday Monday, the euro traded at $1.3631, down from $1.3657 late Friday in New York. It fell to $1.3494 at one point, its lowest level since Feb. 16. The dollar was at ¥77.15, compared with ¥77.60, while the euro was at ¥105.16 compared with ¥105.94. Earlier in the global day, it fell to a fresh 10-year low of ¥103.90.

The pound was at $1.5815 compared with $1.5883. It fell to $1.5775, its lowest level since Jan. 26.

The rout hasn't been limited to the euro. Other currencies with close links to investor sentiment—particularly the Australian and Canadian dollars—fell sharply, while emerging-market currencies also tumbled.
The euro was dented by expectations that Moody's Investors Service Inc. could downgrade French banks this week. That led to a rout in French stocks.
"Irrespective if U.S. data comes in better than expected, the euro-zone debt crisis is expected to dominate this week," said Jane Foley, a currency strategist at Rabobank. "Market nervousness is going to be extremely high."
Against this backdrop, all eyes remain on the yen and whether authorities there respond to appreciation pressures, as the Japanese currency—treated as a safe retreat in times of stress—pushed higher across the board.

"The Swiss National Bank policy can be described as protectionist and its possible that will initiate a greater response from other central banks, and the first in line is the Japanese," said Ms. Foley.

—Anusha Shrivastava contributed to this article.

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