Despite a dovish Bernanke, EUR/USD's attempt to break above the upper limit of a downward channel from early November highs on the back of a weak non-farm payrolls data proved unsuccessful as debt-related worries of euro-zone continued to weigh on the single currency.
Sovereign debt of Spain and Portugal continued to fall in price terms on Monday. Investors also shrugged off the news of LCH.Clearnet reducing the margin requirement for Irish bonds and Fed governor Bernanke talking about the need for expanding US bond buyback program.
Sentix investor confidence indicator for Euro-zone fell below expecatations in December, and was another negative for the pair. The index fell to 9.7 from 14 in November and against market expectations of 11, data released at 9:30 GMT showed.
At 12:35 GMT on Monday, the pair was at 1.3302, off Friday's close of 1.3420, its highest since November 22. The pair is now targetting 1.3199 (S1) on the downside, which might not be a strong support.
Further down, 1.3113 (S2) seems to be a stronger support within the channel, as suggested by a medium-term resistance/support line for the pair, which is also near the 200-day SMA on the daily chart.
At November 30 low of 1.2968, EUR/USD was down 9.2 percent from the 10-month high of 1.4280 hit earlier in the same month at the height of worries related to Fed's quantitative easing.
Falling below 1.2968 (S3) will lengthen the downward channel with next target seen at 1.2885 (S4), another long-term support for euro.
Through November, market focus was on fresh news about deepening debt issues of peripheral Europe, with some good US economic data and a Korean crisis adding to the bearishness for the common currency.
Market is now awaiting the outcome of the European financial ministers' meeting happening in Brussels on Monday.