Investing.com - The euro pared back gains against the U.S. dollar in holiday thinned trade on Monday, as concerns over rising Spanish borrowing costs fuelled fears that Madrid could be forced into seeking an international bailout.
EUR/USD pulled back from 1.2623, the pair’s highest since May 23, to hit 1.2526 during European afternoon trade, up just 0.08% on the day.
The pair was likely to find support at 1.2495, Friday’s low and an almost two-year low and resistance at 1.2623, the session high.
The yield on Spain’s 10-year bond rose to 6.47% earlier in the day, the highest this year and a level considered unsustainable in the long run, after closing at 6.34% on Friday.
The spike in long-term borrowing costs came after Spain’s government announced Sunday that it was to recapitalize one of the country’s largest commercial lenders, Bankia, sparking fears over the rising cost of bank rescues on government spending.
Investor sentiment was buoyed earlier as fears over the possibility of a Greek exit from the euro zone subsided after weekend opinion polls showed increasing support for pro-bailout party New Democracy ahead of elections due to be held on June 17.
The euro erased gains against the pound and the yen, with EUR/GBP dipping 0.04% to hit 0.7986 and EUR/JPY shedding 0.19% to trade just above a three-and-a-half month low at 99.53.
Trade looked likely to remain quiet on Monday, with some markets in Europe closed for holidays, while markets in the U.S. were to remain closed for the Memorial Day holiday.
EUR/USD pulled back from 1.2623, the pair’s highest since May 23, to hit 1.2526 during European afternoon trade, up just 0.08% on the day.
The pair was likely to find support at 1.2495, Friday’s low and an almost two-year low and resistance at 1.2623, the session high.
The yield on Spain’s 10-year bond rose to 6.47% earlier in the day, the highest this year and a level considered unsustainable in the long run, after closing at 6.34% on Friday.
The spike in long-term borrowing costs came after Spain’s government announced Sunday that it was to recapitalize one of the country’s largest commercial lenders, Bankia, sparking fears over the rising cost of bank rescues on government spending.
Investor sentiment was buoyed earlier as fears over the possibility of a Greek exit from the euro zone subsided after weekend opinion polls showed increasing support for pro-bailout party New Democracy ahead of elections due to be held on June 17.
The euro erased gains against the pound and the yen, with EUR/GBP dipping 0.04% to hit 0.7986 and EUR/JPY shedding 0.19% to trade just above a three-and-a-half month low at 99.53.
Trade looked likely to remain quiet on Monday, with some markets in Europe closed for holidays, while markets in the U.S. were to remain closed for the Memorial Day holiday.