Forex - Euro slips lower vs. dollar

The euro slipped lower against the dollar on Monday as fresh political instability in Italy weighed, while the risk of a looming U.S. government shutdown also hurt market sentiment.

EUR/USD hit 1.3478 during late Asian trade, the session low; the pair subsequently consolidated at 1.3489, sliding 0.24%.

The pair was likely to find support at 1.3460, the low of September 25 and resistance at 1.3536, the high of the same day.

The euro came under pressure after Silvio Berlusconi announced Saturday that he was pulling his ministers out of Prime Minister Enrico Letta’s coalition government and called for fresh elections to be held.

Meanwhile, political wrangling in Washington over funding for President Barack Obama’s healthcare law continued over the weekend, fuelling fears over the prospect for a government shutdown 

Congress must pass a short-term budget by midnight on Monday in order to keep the government open.

Republican opposition to the funding of the Affordable Care Act has created a standoff with the White House and the Democratic-controlled Senate, which have both said they will not support any budget bill that defunds or amends Obamacare.

Elsewhere, the euro was weaker against the pound and the yen, withEUR/GBP down 0.32% to 0.8350 and EUR/JPY losing 0.58% to trade at 132.06.

Also Monday, data showed that China’s HSBC manufacturing index was revised down to 50.2 from an initial reading of 51.2, indicating the recovery in the world’s second largest economy remains fragile. Economists had expected an unchanged reading.