Investing.com - The euro was hovering close to a two-year low against the U.S. dollar on Tuesday, as mounting concerns over record Spanish borrowing costs and weak euro zone economic data clouded the outlook for the region.
EUR/USD hit 1.2078 during U.S. morning trade, the session low; the pair subsequently consolidated at 1.2098, down 0.23%.
The pair was likely to find near-term support at 1.2067, Monday’s low and a two-year low and resistance at 1.2282, Friday’s high.
Sentiment on the euro was hit by fears that Spain will be the next country in the euro zone to require a full-scale bailout after the yield on Spanish 10-year bonds rose to a euro-era high of 7.60% on Tuesday, well above the 7% threshold considered unsustainable if a country is to remain solvent.
Earlier Tuesday, Spain successfully auctioned EUR3.02 billion of three and six-month government bonds but at higher yields than in previous auctions.
Further adding to the gloom, data showed that manufacturing activity in Germany slowed to the lowest level in more than three years in July, just one day after rating’s agency Moody’s cut its outlook on Germany to negative from stable.
Separate reports showed that manufacturing activity in the euro zone contracted at the fastest pace since May 2009 in July, while the French manufacturing sector contracted at the fastest pace in 38 months.
The weak euro zone data offset a report showing that China’s HSBC manufacturing purchasing managers index improved to 49.5 in July, its highest level since February, from a final reading of 48.2 in June.
While the index remained below the 50 level which indicates contraction, the improvement from the previous month eased concerns over a slowdown in the world’s second largest economy.
The euro was hovering close to a 12-year trough against the yen, with EUR/JPY down 0.46% to 94.55 and was within striking distance of a three-and-a-half year low against the pound, with EUR/GBP shedding 0.43% to hit 0.7780.
Also Tuesday, representatives from the European Union and the International Monetary Fund were holding talks with the Greek government in Athens, aimed at getting the country’s economic reform program back on track, amid ongoing speculation over a possible Greek exit from the euro zone.
EUR/USD hit 1.2078 during U.S. morning trade, the session low; the pair subsequently consolidated at 1.2098, down 0.23%.
The pair was likely to find near-term support at 1.2067, Monday’s low and a two-year low and resistance at 1.2282, Friday’s high.
Sentiment on the euro was hit by fears that Spain will be the next country in the euro zone to require a full-scale bailout after the yield on Spanish 10-year bonds rose to a euro-era high of 7.60% on Tuesday, well above the 7% threshold considered unsustainable if a country is to remain solvent.
Earlier Tuesday, Spain successfully auctioned EUR3.02 billion of three and six-month government bonds but at higher yields than in previous auctions.
Further adding to the gloom, data showed that manufacturing activity in Germany slowed to the lowest level in more than three years in July, just one day after rating’s agency Moody’s cut its outlook on Germany to negative from stable.
Separate reports showed that manufacturing activity in the euro zone contracted at the fastest pace since May 2009 in July, while the French manufacturing sector contracted at the fastest pace in 38 months.
The weak euro zone data offset a report showing that China’s HSBC manufacturing purchasing managers index improved to 49.5 in July, its highest level since February, from a final reading of 48.2 in June.
While the index remained below the 50 level which indicates contraction, the improvement from the previous month eased concerns over a slowdown in the world’s second largest economy.
The euro was hovering close to a 12-year trough against the yen, with EUR/JPY down 0.46% to 94.55 and was within striking distance of a three-and-a-half year low against the pound, with EUR/GBP shedding 0.43% to hit 0.7780.
Also Tuesday, representatives from the European Union and the International Monetary Fund were holding talks with the Greek government in Athens, aimed at getting the country’s economic reform program back on track, amid ongoing speculation over a possible Greek exit from the euro zone.