By: Barbara Zigah

The common currency Euro struck a 7-week low in Asian trading today as the Eurozone crisis appears to have deepened overnight. The EUR/USD pair is hovering just above a key support level, and if breached, may result in a sharp sell-off. As reported at 2:58 p.m. (JST), the Euro was trading at $1.4057, a decline of 0.3% but rebounding from the earlier 7-week low of $1.4038. The Euro also slipped to a fresh 6-month low against the Japanese Yen, trading at 107.95 Yen, ahead of the Bank of Japan’s upcoming interest rate decision. The Euro was also under significant pressure against the Swiss Franc, which fell some 0.6% to 1.1023 Swiss Francs.

One bank analyst in Tokyo believes that the Euro will be hard pressed to obtain even modest gains today, citing the decline in Asian equities and the lackluster response to the Italian bond auction. The costs to insure Italian-issued debt against default rose higher than that of similar Spanish-issued debt; the first such occurrence since December 2009 and a clear indication of investors’ collective unease with Italy’s austerity measures.

Market players will look ahead to this week’s European Central Bank interest rate decision; should the ECB take a more dovish stance than it previously has, analysts say that the Euro is likely to be quite vulnerable.