Forex Pros – The euro extended losses against the U.S. dollar on Tuesday, falling to a fresh three-day low, as oil prices retreated modestly, easing concerns over the impact of higher energy costs on the global economic recovery. EUR/USD hit 1.3863 during European late afternoon trade, the pair’s lowest since Thursday; the pair subsequently consolidated at 1.3880, shedding 0.63%. The pair was likely to find support at 1.3742, last Wednesday’s low and resistance at 1.4035, Monday’s and a four-month high. The dollar’s gains came amid reports that more countries may step in to boost oil production and that Libyan leader Moammar Gadhafi may be looking for a way to step down. However, fierce fighting continued in Libya, with fresh reports of bombs falling on the key oil town of Ras Lanuf. The dollar had been pressured lower in recent days amid threats that surging oil prices could dampen the U.S. recovery, and further weighed by the likelihood for a sustained period of low interest rates. Meanwhile, concerns over Greek sovereign debt saw the gap between yields on Greek and German government bonds widen, after ratings agency Moody's downgraded Greece's sovereign rating by three notches on Monday. The single currency shrugged off robust German factory data. Earlier in the day, official data showed that manufacturing orders rose more-than-expected in January, up 2.9%, amid strong domestic demand. The euro was also lower against the pound, with EUR/GBP shedding 0.30% to hit 0.8595. Also Tuesday, a report by a U.S. think tank said some Federal Reserve officials are calling for the central bank to drop language saying it expects to keep rates low for an "extended period" in the report to be released after its monetary-policy meeting next month.

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