Investing.com - The euro held gains against the U.S. dollar on Wednesday, despite sustained euro zone debt concerns, as markets eyed the minutes of the Federal Reserve’s latest policy meeting amid speculation the central bank may implement further easing measures to shore up growth.
EUR/USD hit 1.2296 during European afternoon trade, the daily high; the pair subsequently consolidated at 1.2288, rising 0.31%.
The pair was likely to find support at 1.2234, Tuesday’s low and a two-year low and resistance at 1.2400, the high of July 6.
Sentiment on the euro remained vulnerable after Germany’s Constitutional Court delayed on Tuesday its decision on whether the euro zone's bailout fund, the European Stability Mechanism, is compatible with German law.
The court said a decision could take months rather than weeks due to the complexity of the ruling. Without German backing, the ESM, which was originally meant to start on July 1, then delayed to July 9, cannot come into effect.
Meanwhile, Spanish Prime Minister Mariano Rajoy announced EUR65 billion of new austerity measures earlier in the day, in an effort to meet new budget-deficit targets agreed with euro zone partners.
However, market analysts warned that the fresh austerity measures were likely to drag Spain’s economy deeper in to a recession.
The fresh budget cuts come a day after the conclusion of the latest meeting of euro zone finance ministers.
While the ministers agreed to grant Spain an extra year through 2014 to reach its deficit reduction targets, they did not come up with a final figure for aid for the country's ailing banks but said some EUR30 billion would be available by the end of this month.
Also Wednesday, Germany saw borrowing costs fall to a record low at an auction of 10-year government bonds, as sustained concerns over the region’s debt crisis continued to boost demand for safe haven bunds.
Elsewhere, the euro was trading close to a fresh three-and-a-half year low against the pound with EUR/GBP easing up 0.01%, to hit 07895.
Later in the day, the U.S. was to release official data on trade balance and crude oil stockpiles, followed by the minutes of the Federal Reserve’s June policy-setting meeting.
EUR/USD hit 1.2296 during European afternoon trade, the daily high; the pair subsequently consolidated at 1.2288, rising 0.31%.
The pair was likely to find support at 1.2234, Tuesday’s low and a two-year low and resistance at 1.2400, the high of July 6.
Sentiment on the euro remained vulnerable after Germany’s Constitutional Court delayed on Tuesday its decision on whether the euro zone's bailout fund, the European Stability Mechanism, is compatible with German law.
The court said a decision could take months rather than weeks due to the complexity of the ruling. Without German backing, the ESM, which was originally meant to start on July 1, then delayed to July 9, cannot come into effect.
Meanwhile, Spanish Prime Minister Mariano Rajoy announced EUR65 billion of new austerity measures earlier in the day, in an effort to meet new budget-deficit targets agreed with euro zone partners.
However, market analysts warned that the fresh austerity measures were likely to drag Spain’s economy deeper in to a recession.
The fresh budget cuts come a day after the conclusion of the latest meeting of euro zone finance ministers.
While the ministers agreed to grant Spain an extra year through 2014 to reach its deficit reduction targets, they did not come up with a final figure for aid for the country's ailing banks but said some EUR30 billion would be available by the end of this month.
Also Wednesday, Germany saw borrowing costs fall to a record low at an auction of 10-year government bonds, as sustained concerns over the region’s debt crisis continued to boost demand for safe haven bunds.
Elsewhere, the euro was trading close to a fresh three-and-a-half year low against the pound with EUR/GBP easing up 0.01%, to hit 07895.
Later in the day, the U.S. was to release official data on trade balance and crude oil stockpiles, followed by the minutes of the Federal Reserve’s June policy-setting meeting.