Euro lowers to $1.4556 in European trade

FRANKFURT: The euro was lower against the dollar Tuesday while investors remained cautious about debt and credit problems in Greece and Spain.

The 16-nation euro bought $1.4556 in European morning trade, down from the $1.4647 in late New York trading Monday.

The British pound fell to $1.6261 from $1.6304 while the dollar gained on the Japanese yen to 88.98 from 88.63 late Monday in New York.

Greece's prime minister announced a barrage of spending cuts Monday and warned that the country risked drowning in debt. The government has promised to step up efforts to reduce the deficit after a ratings agency downgraded the country's debt rating. Also last week, a rating agency lowered the credit rating outlook for Spain to negative.

Markets also await more details from the U.S. Federal Reserve, which wraps up its last policy meeting of the year on Wednesday. Investors expect the central bank to keep its benchmark interest rate near zero, but there is some concern that rates could rise sooner than previously thought as the economy improves.

Higher interest rates can support a currency as investors transfer funds to where they earn higher returns.

The euro's "near term resistance at $1.4680 to $1.4690 remains intact for now, as the euro trades sideways in an attempt to stem its losses of the past few days," Michael Hewson at CMC Markets said.

"Even though Friday's decline has shifted sentiment on the euro to slightly negative, it could be susceptible to a move back to $1.4800," he said. "While below this level the $1.4480 target remains."