Forexpros – The euro was higher against the yen on Monday, as news of a Spanish bailout supported demand for the single currency, although ongoing concerns over the handling of the debt crisis in the euro zone continued to weigh on investor confidence.
EUR/JPY hit 100.92 during European afternoon trade, the pair’s highest since May 23; the pair subsequently consolidated at 99.88, rising 0.42%.
The pair was likely to find support at 98.93, the low of May 29 and resistance at 101.46, the high of May 23.
The euro found strong support after Spain’s Finance Minister Luis de Guindos said the European Union will grant Spain a loan of up to EUR100 billion that the government will use to recapitalize the country’s ailing banking sector.
Spanish Prime Minister Mariano Rajoy on Sunday expressed hope that the bailout would help the country’s ailing economy, saying, “The European project, the future of the euro and our banking system all won new credibility.” But he warned against expecting a quick turnaround following the banking rescue.
But investors remained cautious as details of the Spanish bailout agreement remained unclear, with the exact amount Spain is to receive still to be decided, after the results of independent banking audits are published later this month.
Meanwhile, uncertainty over the outcome of a Greek general election on June 17, which could determine the course of the country’s future in the euro zone, also weighed.
Earlier in the day, official data showed that industrial production in France rose far more-than-expected April, jumping 1.5% after a 1% decline the previous month. Analysts had expected industrial production to rise 0.1% in April.
Elsewhere, the yen was fractionally higher against the U.S. dollar with USD/JPY inching up 0.08%, to hit 79.52.
Also Monday, government data showed that an index of manufacturing activity in Japan improved less-than-expected in the second quarter, rising to minus 5.7 from a reading of minus 7.3 the previous quarter.
Analysts had expected the index to improve to minus 2.4 in the second quarter.
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