Forex - EUR/USD continues dropping amid Italy, Spain woes

Investing.com - The euro continued to falter against the dollar during Tuesday’s Asian session as traders in the region took their turn digesting a spate of glum news out of the euro zone released on Monday.

In Asian trading Tuesday, EUR/USD slumped 0.14% to 1.3496. The pair was likely to find support at 1.3415, last Tuesday's low, and resistance at 1.3711, Thursday's high. EUR/USD plunged 0.79% during Monday’s U.S. session.

One reason for the common currency’s ills is news out of Spain. Amind corruption allegations, Spanish Prime Minister Mariano Rajoy is facing calls for his resignation. Those headlines and others interrupted the euro’s recent ascent against the greenback.

Elsewhere, Spanish employment data revealed that the number of unemployed people in January rose by 2.7%, or by 132,055, to 4.98 million, which gave the euro some support.

Analysts were expecting the number to rise by 150,000. Spain, the euro zone’s fourth-largest economy, already has an unemployment rate north of 20%, giving it one of the highest rates of joblessness in the developed world.

Meanwhile, Italy did nothing to help the situation as bond yields there surged after former Prime Minister Silvio Berlusconi pledged to cut taxes and repay a reviled real estate tax if his countrymen give him his old job back. Left-of-center rival Pier Luigi Bersani countered those points by promising to spend EUR7.5 billion on public works projects if elected.

Either option is seen as undoing the austerity measure imposed by Mario Monti’s government. Monti, who has decided to run for a second term, has shown signs of being open to tax concessions. Italy is the euro zone’s third-largest economy behind Germany and France.

The headlines dragged EUR/JPY lower by 0.16% to 124.64 while EUR/AUD gained 0.24% to 1.2978. EUR/NZD added 0.07% to 1.6038.