Investing.com - The euro dropped to a near two-year low against the U.S. dollar on Wednesday, pressured lower as fears over Spain’s mounting borrowing costs and its weakening banking system intensified.
EUR/USD hit 1.2457 during late Asian trade, the pair’s lowest since July 1 2010; the pair subsequently consolidated at 1.2476, shedding 0.21%.
The pair was likely to find support at 1.2350 and resistance at 1.2504, the session high.
The euro weakened amid concerns over the situation in Spain, where rising bond yields, the growing costs of bank rescues and a recession hit economy fuelled fears that Madrid will be forced to seek an international bailout.
The yield on Spanish 10-year bonds climbed to their highest level so far this year on Tuesday, approaching the critical 7% threshold that preceded bailouts in Greece, Ireland and Portugal.
Late Tuesday, ratings agency Egan-Jones downgraded Spain's sovereign rating for the third time in less than a month, citing concerns over elevated government debt levels.
The euro was little changed against the pound, with EUR/GBP dipping 0.01% to hit 0.7993 but slumped to a five-month low against the yen, with EUR/JPY shedding 0.30% to hit 99.09.
Later Wednesday, Italy was set to auction up to EUR6.25 billion of five and 10-year bonds, while European Central Bank President Mario Draghi was to speak. In addition, the U.S. was to release a report on pending home sales.
EUR/USD hit 1.2457 during late Asian trade, the pair’s lowest since July 1 2010; the pair subsequently consolidated at 1.2476, shedding 0.21%.
The pair was likely to find support at 1.2350 and resistance at 1.2504, the session high.
The euro weakened amid concerns over the situation in Spain, where rising bond yields, the growing costs of bank rescues and a recession hit economy fuelled fears that Madrid will be forced to seek an international bailout.
The yield on Spanish 10-year bonds climbed to their highest level so far this year on Tuesday, approaching the critical 7% threshold that preceded bailouts in Greece, Ireland and Portugal.
Late Tuesday, ratings agency Egan-Jones downgraded Spain's sovereign rating for the third time in less than a month, citing concerns over elevated government debt levels.
The euro was little changed against the pound, with EUR/GBP dipping 0.01% to hit 0.7993 but slumped to a five-month low against the yen, with EUR/JPY shedding 0.30% to hit 99.09.
Later Wednesday, Italy was set to auction up to EUR6.25 billion of five and 10-year bonds, while European Central Bank President Mario Draghi was to speak. In addition, the U.S. was to release a report on pending home sales.