Forex - EUR/USD drops from high on risk flight

Published 01/20/2012, 07:22 AM
Updated 01/20/2012, 07:25 AM
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Investing.com - The euro pulled back from a two week high against the U.S. dollar Friday, on risk flight triggered by Greek fears and stock losses.  

EUR/USD was trading at 1.2909 down 0.46%, earlier it hit a high of 1.2986 and a low of 1.2891.  

The pair was likely to find support at 1.2626, Monday's low and technical resistance exists at 1.2986, this sessions high.  

The single currency stumbled on renewed Greek debt fears and mostly lower euro zone stock markets.  

However, the euro is still heading for its first weekly gain in seven weeks as Spain and France sold bonds at lower yields yesterday despite the Standard & Poor's downgrade  

Spain sold EUR6.6billion of bonds maturing in 2016, 2019 and 2022 beating the maximum target of EUR4.5billion. Yields on the 2019 and 2022 dropped, however borrowing costs increased on the 2016's.  

In addition, The European Central Bank fueled euro optimism by stating that it has a whole range of unconventional measures to manage the debt crisis, earlier.  

Investors remain cautious as talks continue between Greek Prime Minister Lucas Papademos and the nation's creditors after breaking down last week.  

News of hedge fund creditors considering suing Greece, in human rights court, for losses added to the euro zone's negative sentiment on the trading session.

 Lee Hardman, of the Bank of Tokyo Mitsubishi, explained the Greek issue to Bloomberg, "Even if they do reach a deal, the debt levels for Greece will still be unsustainable and further restructuring will be needed."  .

The Euro fell against the pound with EUR/GBP  dropping 0.32% to 0.8348.  

Next week, investors are awaiting the FOMC meeting on Tuesday.





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