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Forex - EUR/USD moves lower despite Spain rescue package

Published 06/11/2012, 11:46 AM
Updated 06/11/2012, 11:47 AM
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Investing.com -The euro turned lower against the U.S. dollar Monday, despite spiking higher in early trade on the Spanish bailout deal, amid concerns over its feasibility and uncertainty prior to the Greek elections.

EUR/USD pulled back from 1.2669, the pair’s highest since May 23, to hit 1.2503 during U.S. afternoon trade, giving back 0.11.

The pair was likely to find support at 1.2434, Friday’s low and near-term resistance at 1.2687, the high of May 23.

Early in the session, the single currency rallied more than 1% against the greenback earlier after euro zone finance ministers agreed to grant Spain a loan of up to EUR100 billion, which the government will use to recapitalize the country’s ailing banking sector.

However,  initial optimism faded as details of the Spanish bailout agreement remained unclear, with the amount Madrid will receive to be decided after the results of independent banking audits are published later this month.

Meanwhile, investors remained focused on the outcome of a Greek general election this weekend, which could determine if the country is to remain on in the euro zone.

The euro pared gains against the yen, with EUR/JPY slipping 0.01% to trade at 99.44, off an earlier high of 100.92, and erased gains against the pound, with EUR/GBP giving back 0.38% to hit 0.8060.

Also Monday, official data showed that French manufacturing output fell 0.7% in April, while a separate report showed that Italy’s gross domestic product contracted by 0.8% in the first quarter, underlining concerns that economic growth in the euro area is faltering.

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