Investing.com - The euro fell against the dollar Thursday on fears that Europe's banks are bracing for increasing uncertainty across the crisis-ridden continent.
EUR/USD hit 1.2905 during early Asian trading, down 0.28%, up from a session low of 1.2888 and off from a high of 1.2944.
The pair was likely to test technical support at 1.2866 and resistance at 1.3034.
In Europe, bank use of the European Central Bank's overnight deposit facility hit a record EUR452.03 billion, fueling fears that banks are hoarding money stemming from recent loans made to them from the ECB instead of investing it back into the economy.
"If European banks are still this concerned, it's not a good sign," said Karl Schamotta, senior markets strategist with Western Union Business Solutions, according to Reuters.
"That underlines the possibility that this liquidity crunch is getting worse and will continue into the new year.
The news that banks were stockpiling cash offset what would have been perceived as a positive response to an Italian government bond auction, where yields did not spike through the roof as previously had been feared.
However, more auctions are on the way in Italy later Thursday, and market watchers remain on edge.
Meanwhile, the euro was down against the pound and down against the yen, with EUR/GBP falling 0.15% to hit 0.8360 and EUR/JPY falling 0.36% to hit 100.49.
On Thursday in the U.S., weekly jobless claims will publish as will the Chicago Purchasing Managers' Index, which will reveal the economic health of the manufacturing sector in the Chicago region.
Also in the U.S., market watchers will pay attention to crude and gasoline inventories as well as pending home sales data.
In Europe, German inflation data will hit the wire, and the European Central Bank will also release data on private loans as well as on the level of the money supply.
EUR/USD hit 1.2905 during early Asian trading, down 0.28%, up from a session low of 1.2888 and off from a high of 1.2944.
The pair was likely to test technical support at 1.2866 and resistance at 1.3034.
In Europe, bank use of the European Central Bank's overnight deposit facility hit a record EUR452.03 billion, fueling fears that banks are hoarding money stemming from recent loans made to them from the ECB instead of investing it back into the economy.
"If European banks are still this concerned, it's not a good sign," said Karl Schamotta, senior markets strategist with Western Union Business Solutions, according to Reuters.
"That underlines the possibility that this liquidity crunch is getting worse and will continue into the new year.
The news that banks were stockpiling cash offset what would have been perceived as a positive response to an Italian government bond auction, where yields did not spike through the roof as previously had been feared.
However, more auctions are on the way in Italy later Thursday, and market watchers remain on edge.
Meanwhile, the euro was down against the pound and down against the yen, with EUR/GBP falling 0.15% to hit 0.8360 and EUR/JPY falling 0.36% to hit 100.49.
On Thursday in the U.S., weekly jobless claims will publish as will the Chicago Purchasing Managers' Index, which will reveal the economic health of the manufacturing sector in the Chicago region.
Also in the U.S., market watchers will pay attention to crude and gasoline inventories as well as pending home sales data.
In Europe, German inflation data will hit the wire, and the European Central Bank will also release data on private loans as well as on the level of the money supply.