As this week comes to an end, the euro slipped against the U.S. dollar to the lowest level in seven weeks as European leaders split over the means required to tackle the two-year debt crisis, while the Italian bond sale supported the pessimism seen in the market to extend further as yields inclined sharply again.

The sentiment deteriorated further after the German Chancellor, Angela Merkel disappointed markets as usual and reassured that Germany is still against the intervention of the European Central Bank in fighting back the debt crisis, which supported the U.S. dollar to gain positive momentum and pressured other currencies to the downside as investors avoid as much risk as possible especially when this week is to end.

The low yielding U.S. dollar is to end a strongly bullish week, where the greenback benefited the most as a safe haven, as the European debt crisis is escalating and the losses are well spread across the board.

The U.S. dollar index (USDIX) opened in Asia today at 79.02 and reached a high of 79.61 and a low of 78.99, and is trading in the moment at 79.50, extending the gains recorded during the week.

Merkel also confirmed that Germany is still against the issuance of European joint bonds, where the chancellor said that the issuance of such bonds would remove any incentives for European nations to improve their budgets and fiscal consolidation.

Markets were looking forward to the meeting and hoped that Germany will allow the European Central bank to restore confidence and calm rising jitters by buying indebted European bonds, which is the only way for the yields to fall, especially after the debt crisis threatened Germany on Wednesday, when the nation failed to meet the bond-sale target.

Pessimism spread further after the cost of insuring European bonds against default climbed to all-time records for Spain, France and Belgium as European leaders still split over the means to block the two-year old debt crisis in Europe.

The euro extended the losses against the U.S. dollar and sterling pound after yields on Italian short-term bonds were almost doubled in the November auction compared with yields seen in the October auction. In addition, several European officials said that the current 440 billion euros firepower of the European rescue fund (EFSF) could provide only half of what was planned due to rising yields on indebted European bonds.

The EUR/USD pair opened the session today at $1.3344, and recorded the highest at $1.3350 and the lowest at $1.3225, and is trading in the moment at $1.3243 around the lowest recorded seen in seven weeks.

Concerning the EUR/GBP, the pair is currently trading around 0.8549, after reaching the highest at 0.8617 and the lowest at 0.8529, noting that the pair started the session at 0.8549.