Investing.com - The euro reversed early gains on Monday, to fall to fresh six-month lows as renewed concerns over political instability in Italy pressured the single currency lower amid prospects for fresh elections.
EUR/USD hit a low of 1.1641 by 06:30 AM ET (10:30 AM GMT), the weakest level since November 13, after rising as high as 1.1733 earlier.
The single currency came under renewed selling pressure as investors digested the prospect of fresh elections in Italy.
The euro had risen to the day’s highs earlier after Italy’s populist parties abandoned their bid to form a coalition government after the country’s President Sergio Mattarella blocked the nomination of a euro sceptic finance minister.
Investors had feared that the coalition could endanger Italy’s membership in the euro zone.
But the president’s move could risk a constitutional crisis and the country is now expected to go to the polls again later this year
The euro gave back early gains against the yen, with EUR/JPY last at 127.31, within close reach of Friday’s eleven-month trough of 127.13.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was last at 94.23, the strongest level since mid-November on the back of the weaker euro.
The dollar was steady against the yen, with USD/JPY last at 109.36 after edging up to an overnight high of 109.84.
Demand for the dollar continued to be underpinned after U.S. President Donald Trump said on Sunday that a U.S. team had entered North Korea to prepare for a proposed summit between him and North Korean leader Kim Jong Un, despite question marks hanging over the talks.
The pound pushed higher, with GBP/USD rising 0.20% to 1.3322.
Trade volumes looked likely to remain light on Monday, with markets in the U.S. and the UK closed for holidays.