Asian session: The euro was 0.3 percent from the lowest since July 2010

The euro was poised for the biggest monthly decline since September before a sale of Italian debt tomorrow and data this week forecast to confirm the prolonged fiscal crisis is hurting the region’s economy. Italy is scheduled to sell 3.5 billion euros ($4.4 billion) of five-year notes and 2.75 billion euros of 10-year debt tomorrow. The nation’s two-year yields jumped to a four-month high of 3.945 percent yesterday after the country sold zero- coupon debt

The 17-nation currency was 0.3 percent from the lowest since July 2010 after yield premiums on Spain’s securities over Germany’s rose to the most in 17 years. Spain is considering injecting debt issued by the government into the Bankia group, using a mechanism that would free it from raising the money from investors. The government will decide in two or three months whether to use its debt to recapitalize the nationalized lender, a spokesman for the Economy Ministry said in a phone interview yesterday.

“Europe has to dissipate any doubts about the euro,” Spanish Prime Minister Mariano Rajoy said yesterday. It “must affirm that the euro is an irreversible project and act in consequence.”

The extra yield investors demand to hold Spain’s 10-year bonds instead of similar-maturity German notes soared to 5.12 percentage points yesterday, the most since 1995, data compiled by Bloomberg showed.

The Dollar Index traded near the highest in 20 months as concern Europe’s turmoil is hurting economic growth boosted demand for the safest assets.

EUR/USD: during the Asian session the pair fell to $1.2510.

GBP/USD: during the Asian session the pair fell to $1.5655.

USD/JPY: during the Asian session the pair fell, come nearer to a yesterday's low.

UK data at 1000GMT sees the CBI Quarterly Distributive Trades data. Early in the day, BOE Chief Economist is expected to make regional media appearances. US markets return Tuesday and data starts at 1300GMT with the S&P/Case-Shiller Home Price Index. Then at 1400GMT by Consumer Confidence and then at 1430GMT by the weekly Retail Trade Index and also the Dallas Fed Manufacturing Outlook Survey.