Forex - EUR/USD rallies on U.S. numbers, Spanish bailout speculation

Investing.com - The euro traded higher against the U.S. dollar Thursday, despite a U.S. government report revealing initial jobless claims dropping to a greater than four year low last week, while hopes that Spain will soon request a bailout also supported demand for the single currency.

EUR/USD hit 1.2951 during U.S. trade, the pair’s highest since Tuesday; the pair subsequently consolidated at 1.2934, gaining 0.46%.

The pair was likely to find support at 1.2824, the session low and resistance at 1.2990, Wednesday’s high.

The U.S. Department of Labor reported the number of individuals filing for initial jobless benefits last week fell by 30,000 to a seasonally adjusted 339,000, the lowest level since February 2008, compared to expectations for an increase of 1,000 to 370,000.

The previous week’s figure was revised up to 369,000 from a previously reported 367,000.

Following the data, the Wall Street Journal reported that a spokesman for the Labor Department said one large state had not reported additional quarterly figures, accounting for a significant part of the steep decline in claims.

A separate report showed that the U.S. trade deficit widened to USD44.2 billion in August, broadly in line with market expectations, as imports outpaced exports.

Demand for the single currency remained underpinned by hopes that a ratings downgrade on Spain by Standard & Poor’s would force Madrid to formally request a bailout, which investors hope will ease the debt crisis in the euro zone.

S&P cut the country’s credit rating to BBB-minus with a negative outlook late Wednesday, just one notch above junk status, citing “mounting risks to Spain’s public finances.”

The euro also extended gains against the pound and the yen, with EUR/GBP higher by  0.30% to 0.8068 and EUR/JPY rallying 0.92% to 101.59.

In other news Thursday, International Monetary Fund head Christine Lagarde urged governments to work together to repair the faltering global economy or risk a further slowdown in global growth.