Forexpros – The euro pared losses against the yen on Tuesday, pulling back from an almost 10-year low, amid speculation that the European Central Bank was buying Italian government debt after the country’s borrowing costs surged to a euro-lifetime high.
EUR/JPY pulled away from 104.39, the daily low, to hit 105.15 in European morning trade, still down 0.45% on the day.
The pair was likely to find support at 103.91, Monday’s low and the pair’s lowest since late December 2000 and resistance at 105.73, Monday’s high.
Earlier Tuesday, the Italian Treasury sold a total of EUR6.48 billion worth of fixed rate bonds, just under its maximum target of EUR7 billion.
The Treasury offered up to EUR4 billion in a new five-year bond, maturing in 2016 and sold EUR3.86 billion at a yield of 5.60%, the highest level since the inception of the single currency.
The Treasury also sold EUR2.62 billion of bonds maturing in 2018.
The auction came after earlier reports that Italy’s Finance Ministry had held talks with Chinese officials about “significant” purchases of Italian bonds.
The single currency remained under pressure amid mounting fears over a potential Greek default and expectations for a ratings cut on France’s three largest banks, due to their exposure to Greek holdings.
The euro also trimmed losses against the U.S. dollar, shedding 0.30% to hit 1.3637.
On Monday, Italian Prime Minister Silvio Berlusconi pledged that an unpopular austerity bill would be approved this week, in a move designed to reassure markets about Italy’s finances amid the euro zone debt crisis.
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