Forexpros – The euro fell to a session low against the U.S. dollar on Monday, as fresh concerns over Spain’s woes overshadowed speculation over the possibility of further easing from the Federal Reserve.
EUR/USD hit 1.3209 during European afternoon trade, the session low; the pair subsequently consolidated at 1.3220, shedding 0.25%.
The pair was likely to find support at 1.3156, Friday’s low and resistance at 1.3266, the session high.
Concerns over the economic outlook for Spain re-remerged after official data confirmed that the country’s economy entered a recession in the first quarter, with gross domestic product contracting by 0.3% in the three months to March and 0.4% year-on-year.
Market reaction remained muted as the figures were slightly better than estimates released by the Bank of Spain last week for a 0.4% contraction in the first quarter and a 0.5% contraction on the year.
The data came after a government report on Friday showed that the country’s unemployment rate climbed to a record 24.4% in the first quarter.
In addition, ratings agency Standard & Poor’s announced widespread credit ratings downgrades on Spain’s troubled banking sector, following a two notch downgrade of the country’s sovereign credit rating last week.
Elsewhere, official data showed that consumer price inflation in the euro zone remained unchanged at 2.6% in April, but was higher than forecasts for a reading of 2.5%, dampening expectations for a rate cut by the European Central Bank.
But the greenback’s gains were limited after official data on Friday showed that the U.S. economy grew at a slower than expected rate in the first quarter, fuelling speculation that the Fed may implement a fresh round of stimulus measures after Fed chief Ben Bernanke left the possibility open following last week’s monetary policy meeting.
The broadly weaker euro fell to a 22-month low against the pound, with EUR/GBP shedding 0.28% to hit 0.8126 and slumped to a two-week low against the yen, with EUR/JPY down 0.41% to hit 105.94.
Later in the day, the U.S. was to publish official data on core personal consumption expenditures price inflation and personal spending, as well as a report on business activity in Chicago.
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