Investing.com - The euro dropped to a fresh two-year low against the U.S. dollar on Thursday, as renewed concerns over the debt crisis in the euro zone weighed on the single currency, while the absence of stimulus indications by the Federal Reserve supported the greenback.
EUR/USD hit 1.2185 during European afternoon trade, the session low; the pair subsequently consolidated at 1.2185, dropping 0.46%.
The pair was likely to find support at 1.2185, the day’s low and a two-year low and resistance at 1.2296, Wednesday’s high.
The euro found mild support earlier after Italy’s Treasury sold the full targeted amount of EUR7.5 billion worth of 12-month government bonds at an average yield of 2.697%, the lowest since May and down sharply from 3.972% at a similar auction last month.
In addition, official data showed that industrial production in the euro zone rose for the first time in three months in May, increasing by 0.6%. Analysts had expected a modest 0.1% decline.
The single currency remained under pressure however, after the European Central Bank’s monthly bulletin reiterated that downside risks have materialized and that growth in the region will remain weak.
Traders also remained jittery after Spanish Prime Minister Mariano Rajoy announced on Wednesday EUR65 billion of new austerity measures, in an effort to meet new budget-deficit targets agreed with euro zone partners.
Market analysts warned that the fresh austerity measures were likely to drag Spain’s economy deeper in to a recession.
Meanwhile, the dollar remained supported after the Fed said in the minutes of its June policy meeting that the U.S. economy would have to worsen further before the central bank implements additional easing measures.
While a few policymakers said the bank should ease policy to move the economy toward its targets for full employment and stable prices, others indicated that more action could be warranted if growth slows, risks intensified or if inflation seemed likely to fall “persistently” below their goal.
Elsewhere, the euro was trading close to a three-and-a-half year low against the pound with EUR/GBP falling 0.11%, to hit 0.7887.
Later in the day, the U.S. was to release government data on unemployment claims and official data on import prices.
EUR/USD hit 1.2185 during European afternoon trade, the session low; the pair subsequently consolidated at 1.2185, dropping 0.46%.
The pair was likely to find support at 1.2185, the day’s low and a two-year low and resistance at 1.2296, Wednesday’s high.
The euro found mild support earlier after Italy’s Treasury sold the full targeted amount of EUR7.5 billion worth of 12-month government bonds at an average yield of 2.697%, the lowest since May and down sharply from 3.972% at a similar auction last month.
In addition, official data showed that industrial production in the euro zone rose for the first time in three months in May, increasing by 0.6%. Analysts had expected a modest 0.1% decline.
The single currency remained under pressure however, after the European Central Bank’s monthly bulletin reiterated that downside risks have materialized and that growth in the region will remain weak.
Traders also remained jittery after Spanish Prime Minister Mariano Rajoy announced on Wednesday EUR65 billion of new austerity measures, in an effort to meet new budget-deficit targets agreed with euro zone partners.
Market analysts warned that the fresh austerity measures were likely to drag Spain’s economy deeper in to a recession.
Meanwhile, the dollar remained supported after the Fed said in the minutes of its June policy meeting that the U.S. economy would have to worsen further before the central bank implements additional easing measures.
While a few policymakers said the bank should ease policy to move the economy toward its targets for full employment and stable prices, others indicated that more action could be warranted if growth slows, risks intensified or if inflation seemed likely to fall “persistently” below their goal.
Elsewhere, the euro was trading close to a three-and-a-half year low against the pound with EUR/GBP falling 0.11%, to hit 0.7887.
Later in the day, the U.S. was to release government data on unemployment claims and official data on import prices.