* Euro down after Moody's downgrade of Ireland
* Leveraged names, semi-official names dump euro
* Euro eyes 200-day moving average at $1.3105 (Updates prices, adds quotes, details, changes byline, dateline, previous LONDON)
By Wanfeng Zhou
NEW YORK, Dec 17 (Reuters) - The euro fell against the dollar on Friday and looked set to extend losses after a multi-notch downgrade of Ireland's credit rating overshadowed solid German economic data and underscored the severity of the euro zone debt crisis.
Moody's Investors Service slashed Ireland's credit rating by five notches to Baa1 with a negative outlook from Aa2 and warned further downgrades could follow if Ireland was unable to stabilize its debt situation. For more see [ID:nLDE6BG0EG].
The euro hit a low around $1.3220, with key support seen around $1.3105, its 200-day moving average. A break below could see the currency retest the $1.30 level and slide toward its December low of $1.2970, traders said.
"Overall the outlook for the euro doesn't look very positive. Going into the year-end, we continue to favor euro/dollar breaking lower," said Mary Nicola, currency strategist at BNP Paribas in New York.
An agreement by European Union leaders to set up a permanent crisis management mechanism from mid-2013 disappointed investors who had hoped for more active measures such as expanding the European Financial Stability Facility or issuing joint European sovereign bonds, so-called E-bonds.
The euro last traded at $1.3223, down 0.1 percent on the
day and near its session low of $1.3217
The euro zone single currency had climbed as high as $1.3360 after the Ifo index showed German business morale hit its strongest since 1991 in December. [ID:nLDE6BG0KP]
Selling before a central bank fixing helped to accelerate the euro's losses in thin liquidity, traders said. Leveraged accounts and a semi-official European name were also seen dumping the currency.
Boris Schlossberg, director of currency research at GFT in New York, said the strong German data could limit the euro's downside.
"Germany's financial health is absolutely vital to the
stability of the European monetary union and as long as its
economy can maintain momentum, euro/dollar's decline is likely
to be contained," he said.
Euro zone graphic package: http://r.reuters.com/hyb65p
Euro zone credit ratings: http://r.reuters.com/get52k
EU SUMMIT
EU leaders on Friday agreed at a summit to try to lengthen the maturities of new sovereign bond issues, and confirmed that private investors will be involved in the future euro zone rescue mechanism, a draft statement showed. [ID:nLDE6BG0O1]
While officials acknowledged there was resistance to the idea of issuing joint euro bonds, analysts said the lack of any new insight into how the EU will address the issue of debt had helped to sour sentiment for the euro.
"What we've heard from the EU summit has been lukewarm, not as informative as some in the market were hoping," said Henrik Gullberg, currency analyst at Deutsche.
"The euro's rally earlier this week may have been fueled by expectations the EU would offer more clarification, and there may be a gradual realization that that is not the case."
Paul Robson, currency strategist at RBS, said a bearish
euro view was also reflected in the euro crosses, with the
single currency hitting a record low against the safe-haven
Swiss franc
The Swedish crown rose to its highest against the euro
since 2006
The dollar was marginally lower at 84.01 yen, having
repeatedly failed to break cleanly above 84.50