EUR/USD (a 4-hour chart)
Euro fell to a fresh 3-month low point against the U.S. dollar after the one step downgrading of the Italy credit rating by the Standard & Poor's.
S & P downgraded Italy's rating from BBB + to BBB, which is only two levels above the junk territory. The rating forecast is negative. The rating agency said that the decrease reflected the weakening of the Italian economy, pointing to the decline in the competitiveness of the country.
Prior to that, the Euro fell to a three-month low against the U.S. dollar after one of the top leaders of the European Central Bank (ECB) detailed its commitment to low interest rates. In an interview with Reuters Governing Council member Joerg Asmussen, explaining ECB President Mario Draghi's announcement of last week, said the ECB would probably keep rates low for more than 12 months. Although a couple of hours later, the ECB announced that the dates mentioned by Asmussenom were not exact, the Euro could not increase again.
The euro against the dollar fall reflects divergent rates of monetary policy of the ECB and the Federal Reserve. Last month, Federal Reserve Chairman Ben Bernanke said that the Fed might start reducing purchases of bonds by the end of this year. This prospect has caused a sharp growth in U.S. interest rates, which in turn increased the attractiveness of the dollar and raised it to multi-year highs against the major currencies and emerging market currencies.