Investing.com - The euro tumbled to a more than four-month low against the yen on Wednesday, as concerns over soaring borrowing costs in Italy and Spain continued to dampen demand for the single currency.
EUR/JPY hit 98.23 during European afternoon trade, the pair’s lowest since January 18; the pair subsequently consolidated at 98.43, tumbling 0.98%.
The pair was likely to find support at 97.67, the low of January 18 and resistance at 99.45, the session high.
The euro found brief support after the European Commission said that stricken euro zone banks could be recapitalized directly through the region’s permanent bailout fund.
In its report on euro zone economic strategy, the Commission also supported the idea of “joint debt issuance” or euro bonds, an idea which has met strong opposition from Germany, and said the euro zone should move towards the idea of a banking union.
But market sentiment remained under pressure after Italy’s Treasury earlier auctioned EUR5.73 billion of 5-and10-year bonds in an auction which met with lackluster investor demand. Borrowing costs rose sharply, indicating that concerns over Spain and uncertainty over the outcome of elections in Greece next month are having a negative impact on Italy.
The euro was also vulnerable 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 6.7% earlier Wednesday, nearing the critical 7% threshold that preceded bailouts in Greece, Ireland and Portugal.
Meanwhile, Greece worries reemerged after an opinion poll showed that anti-bailout party Syriza took the lead in the June 17 election race.
Elsewhere, the yen was higher against the U.S. dollar with USD/JPY shedding 0.50%, to hit 79.10.
Also Wednesday, Bank of Japan policymakers signaled that Japan will likely achieve the 1% inflation target without further monetary easing, but they did not rule out fresh stimulus measures if financial troubles in the euro zone were to exert strong downward pressure on Japan’s economy.
Later in the day, European Central Bank President Mario Draghi was to speak, while the U.S. was to release a report on pending home sales.
EUR/JPY hit 98.23 during European afternoon trade, the pair’s lowest since January 18; the pair subsequently consolidated at 98.43, tumbling 0.98%.
The pair was likely to find support at 97.67, the low of January 18 and resistance at 99.45, the session high.
The euro found brief support after the European Commission said that stricken euro zone banks could be recapitalized directly through the region’s permanent bailout fund.
In its report on euro zone economic strategy, the Commission also supported the idea of “joint debt issuance” or euro bonds, an idea which has met strong opposition from Germany, and said the euro zone should move towards the idea of a banking union.
But market sentiment remained under pressure after Italy’s Treasury earlier auctioned EUR5.73 billion of 5-and10-year bonds in an auction which met with lackluster investor demand. Borrowing costs rose sharply, indicating that concerns over Spain and uncertainty over the outcome of elections in Greece next month are having a negative impact on Italy.
The euro was also vulnerable 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 6.7% earlier Wednesday, nearing the critical 7% threshold that preceded bailouts in Greece, Ireland and Portugal.
Meanwhile, Greece worries reemerged after an opinion poll showed that anti-bailout party Syriza took the lead in the June 17 election race.
Elsewhere, the yen was higher against the U.S. dollar with USD/JPY shedding 0.50%, to hit 79.10.
Also Wednesday, Bank of Japan policymakers signaled that Japan will likely achieve the 1% inflation target without further monetary easing, but they did not rule out fresh stimulus measures if financial troubles in the euro zone were to exert strong downward pressure on Japan’s economy.
Later in the day, European Central Bank President Mario Draghi was to speak, while the U.S. was to release a report on pending home sales.