(CEP News) - The euro is trading near the bottom of its range against the U.S. dollar on Monday as global equity markets continue to fall. The euro continues to lose ground against the U.S. dollar, trading below 1.26 USD level ahead of the North American trading session. EUR/USD has been selling off since the start of the Asian session on the back of rising risk aversion. Despite the drop against the greenback, the euro is showing modest strength this morning against sterling and the Japanese yen. In overnight trading, EUR/GBP hit a one-month high of 0.90973 GBP The data released overnight continue to point to a more problems for the financial sector and weakening global growth. Over the weekend, it was announced that the UK government could raise its stake in Lloyds TSB to as much as 77% from 43%. The deal, which was reached Friday night, will help Lloyds TSB cover its exposure to asset-backed securities after purchasing HBOS in 2008. According to some currency strategists, the euro is also under pressure following more concerns over Eastern Europe's banking system. On Sunday, the World Bank released a report saying it could face a financing gap of between $270-$700 billion for emerging markets. The report also warned that the financial disruptions could overwhelm the abilities of institutions like the World Bank and the IMF to provide a buffer. Weaker Japanese data is also raising risk aversion. Japan's current account for January fell into its first deficit since 1996. According to the Ministry of Finance, the current account fell to a deficit of ¥172.8 billion versus an expected ¥15.3 billion shortfall and following December's ¥125.4 billion surplus. Although EUR/USD is trading close to its recent lows, currency strategists are relatively neutral on the cross. Currency strategists from KBC pointed out that the U.S. dollar did not make any significant gains following a weaker-than-expected nonfarm payrolls report on Friday.

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