The euro lost ground against the dollar on Monday, after new concerns were raised in relation to the decline of the business confidence index in Germany during September, while traders also closely monitored the situation in Greece and Spain.

At around 1600 GMT the euro had hit 1.2910 dollars. The euro also dropped back against the yen at 100.57 yen against 101.42 yen which was hit on Friday. The greenback also fell against the Japanese currency to 77.89 yen against 78.12 yen on Friday.

The IFO confidence index of business in Germany fell in September to its lowest level in two and a half years, falling for the fifth consecutive month according to these new figures released on Monday. “The decline in the IFO index serves as a reminder that even the strongest economies in the euro area suffer” economic hardship, were the comments coming from Jennifer McKeown, a senior analyst at Capital Economics.

Also the market remained under heavy pressure after the announcement on Friday of a break in the talks between Athens and its donors. On Friday donors in Greece (EU, ECB, IMF) have announced they will pause in negotiations with Athens and commence back again in “about a week”. It is a “scheduled departure” added a source in Greek Finance Ministry in Athens.
However concerns still remain high while “the country must be struck this week by a series of strikes in protest against the new wave” of austerity measures announced by Athens, noted Michael Hewson, an analyst at CMC Markets.

In addition, traders continued to scrutinize the situation in Spain, always reluctant to support his global economy from Europe. The German Finance Minister, Wolfgang Schäuble, said Friday that Spain did not need a rescue plan for the economy was strong enough.

However, the European Central Bank (ECB) said it was ready to help the euro area countries in difficulty by buying debt in the secondary market, provided they make the first request to fund European aid which the Spanish government has not yet decided to do so, despite the impatience of the markets.