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Forex - EUR/USD extends losses, hits 1-week low

Published 10/23/2012, 08:15 AM
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Investing.com - The euro extended losses against the U.S. dollar on Tuesday, falling to a one-week low as deepening concerns over Spain’s fiscal and economic outlook weighed on demand for the single currency.

EUR/USD hit 1.2998 during European afternoon trade, the pair’s lowest since October 16; the pair subsequently consolidated at 1.3004, shedding 0.41%.

The pair was likely to find support at 1.2942, the low of October 16 and resistance at 1.3074, the session high.

Sentiment on the euro was hit as a downgrade of Catalonia and four other Spanish regions by ratings agency Moody’s added to uncertainty over when Madrid may formally request a bailout.

Meanwhile, the Bank of Spain said earlier that it expects the country’s economy to contract by 0.4% in the third quarter, bringing the annualized rate of decline to 1.7%, compared to a 1.2% contraction in the three months to June.

The central bank also warned that it could not rule out a deficit target overrun this year.

Elsewhere, Spain’s Treasury auctioned EUR3.528 billion of three-month and six-month government bonds on Tuesday. The yield on the three-month bonds rose to 1.41% from 1.20% last month, while the six-month yield fell to 2.02% from 2.21%.
 
Investors were also cautious ahead of euro zone manufacturing and service sector data slated for release on Wednesday, as well as a closely watched report on German business sentiment, amid ongoing concerns over prospects for growth in the bloc.

The euro was lower against the pound and the yen, with EUR/GBP losing 0.25% to trade at 0.8135 and EUR/JPY down 0.54% to 103.83.

Also Tuesday, talks between Greek coalition leaders on the EUR13.5 billion in austerity cuts demanded by the Troika continued in Athens ahead of the November 12 deadline for euro zone finance ministers to decide whether Greece should get its next tranche of aid.



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