Forexpros – The euro extended its decline against the U.S. dollar on Wednesday, falling to a three-and-a-half month low, as fears over political turmoil in Greece and concerns over Spain’s troubled backing sector saw investors shun the single currency.
EUR/USD hit 1.2963 during U.S. morning trade, the pair’s lowest since January 23; the pair subsequently consolidated at 1.2923, falling 0.63%.
The pair was likely to find support at 1.2838, the low of January 19 and resistance at 1.3006, the session high.
The single currency came under heavy selling pressure amid mounting expectations that a fresh round of elections in Greece is inevitable as attempts to form a coalition government flounder.
On Tuesday, Alexis Tsipras, the head of Greece’s second-biggest party Syriza, said that Greece’s financial aid package is null and void, fuelling concerns over a disorderly Greek default or possible exit from the single currency bloc.
Meanwhile, speculation swirled that Spain is set to announce plans to support its banking system. The yield on Spanish 10-year bonds rose above 6% earlier, reflecting investor concerns over holding riskier assets.
Investors also remained concerned over whether French president-elect Francois Hollande’s focus on growth rather than austerity measures as a means to tackle the crisis could spark tensions with Germany.
The euro fell to a fresh three-and-a-half year low against the pound, with EUR/GBP shedding 0.26% to hit 0.8028 and slumped to a three-month low against the yen, with EUR/JPY dropping 1.01% to hit 102.82.
Also Wednesday, official data showed that German exports and imports both hit record highs in March, fuelling hopes that the euro zone’s largest economy is weathering the effects of the debt crisis.
The Federal Statistics Office said exports increased by 0.9% to EUR91.8 billion, while imports rose 1.2% to EUR78.1 billion.
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