Forexpros – The euro on Tuesday dropped against the yen after markets began to view the EUR100 billion bailout package prepared for Spain with greater degree of skepticism as to whether it will benefit the entire eurozone.
In Asian trading on Tuesday, EUR/JPY hit 98.87, down 0.31%, up from a low of 98.72 and off a high of 99.17.
The pair sought to test support at 98.57, the low of June 8, and resistance at 99.30, the high of May 30.
The yen fell on weekend news that Spain had become the fourth eurozone country to seek emergency credit, following Greece, Portugal and Ireland by accepting EUR100 billion.
The money will prop up the Spanish banking sector.
Markets applauded the news initially, though a lack of details as to which banks will receive what and even if the bailout will steer Europe closer to growth sent investors back to risk-off assets like the yen.
Meanwhile, Greece’s June 17 parliamentary elections are drawing closer and doubts remain as to which political party will dominate.
A strong showing by the leftist Syriza would open the door to a rejection of austerity measures tied to bailout money and spark fears of a pending Greek exit from the eurozone.
Polls have been showing a close race between Syriza and the conservative New Democracy.
The euro, meanwhile, was flat against the pound and down against the Canadian dollar, with EUR/GBP trading at 0.8060 and EUR/CAD down 0.04% and trading at 1.2872.
No major European data is due out later Tuesday.
Later in the day, Bank of Japan Governor Masaaki Shirakawa is due to speak, and his comments will be closely watched for any indication of the future possible direction of monetary policy.
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