Forexpros – The euro fell to a nine-day low against the yen on Monday, as sustained concerns over Spain’s sovereign debt crisis weighed on the single currency while the yen remained supported by last week’s easing steps announced by the Bank of Japan.
EUR/JPY hit 105.74 during European afternoon trade, the pair’s lowest since April 17; the pair subsequently consolidated at 105.98, shedding 0.38%.
The pair was likely to find support at 105.27, the low of April 17 and resistance at 106.68, the high of April 11.
The single currency came under pressure after official data confirmed that Spain’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.
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.
Meanwhile, the yen remained supported after the BoJ said it will increase the size of its asset purchase fund by JPY5 trillion, while a program to provide loans to banks was cut back by JPY5 trillion. Economists had expected an increase of as much JPY10 trillion to the nation’s stimulus program.
The central bank also kept interest rates on hold, in a widely expected decision.
Investors also remained cautious after official data showed that the U.S. core personal consumption expenditure index rose broadly in line with market expectations in March, while personal spending rose less-than-expected.
The yen was also higher against the U.S. dollar with USD/JPY retreating 0.19%, to hit 80.12.
Later in the day, the U.S. was to publish a report on business activity in Chicago.
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