Forexpros – The euro was steady close to a two-year low against the U.S. dollar on Monday, as record Spanish borrowing costs and fresh fears over a possible Greek exit from the euro zone weighed.
EUR/USD hit 1.2083 during European afternoon trade, the pair’s lowest since mid-June 2010; the pair subsequently consolidated at 1.2121, shedding 0.28%.
The pair was likely to find support at 1.1956, the low of June 10, 2010 and resistance at 1.2133, the session high.
The yield on Spanish 10-year bonds rose to a record 7.53% on Monday, well above the 7% threshold widely considered unsustainable if a country is to remain solvent, amid growing fears that Spain will need a full bailout after the state of Murcia followed Valencia in requesting financial aid from Madrid over the weekend.
The spike in borrowing costs came despite euro zone finance ministers approving a package of as much as EUR100 billion to bailout Spain’s banks on Friday.
Meanwhile, fears over a Greek exit from the euro zone resurfaced, amid worries over whether Athens can meet the conditions of its international bailout ahead of a meeting with the Troika on Tuesday.
The euro pulled back from a more than three-and-a-half year low against the pound, with EUR/GBP easing up 0.25% but remained within striking distance of a 12-year tough against the yen, with EUR/JPY down 0.61% to 94.82.
Neither the euro zone nor the U.S were to release any significant economic indicators on Monday, so markets looked set to remain focused on developments in Europe.
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