Forexpros – The euro fell against the safe-haven yen on Wednesday as investors sold the European currency to await the conclusions of an upcoming European Union summit later this week.
Fears the continent’s leaders will remain at impasse over how to battle the debt crisis weakened the European currency.
In Asian trading on Wednesday, EUR/JPY hit 99.09, down 0.27%, up from a low of 99.08 and off a high of 99.43.
The pair sought to test support at 99.08, the earlier low, and resistance at 99.89, the high from June 26.
The European debt crisis continues to run its course, with Spain finding itself increasingly in the crosshairs.
Fears began to build Wednesday that an upcoming European Union summit aimed at tackling the crisis will produce no specific policy game plans aimed at ending the continent’s financial misfortunes.
Borrowing costs remained elevated across Europe, in Spain especially, sending investors seeking shelter in the safe-haven yen.
In Spain, the government sold at auction EUR1.6 billion in three-month government bonds most recently, slightly more than the targeted amount, but at an average yield of 2.36%, up from 0.84% in May.
The government also sold EUR1.48 billion in six-month debt at an average yield of 3.23%, up from 1.73% in May.
Meanwhile, the yield on Spanish 10-year bonds rose to 6.73% in earlier trading, not far from the 7% level deemed unsustainable in the markets, which sent the dollar rising and the euro falling.
Germany continues to reject calls to take part in financing a single bond issue backed by European countries to ease credit conditions in debt-ridden swathes of the continent.
Adding to the yen’s gains and the euro’s decline, Cyprus has said it will seek financial assistance from the European Union, while yields in Italian two-year bonds rose as well.
The euro, meanwhile, was up slightly against the pound and up against the Canadian dollar, with EUR/GBP trading up 0.02% at 0.7990 and EUR/CAD up 0.02% and trading at 1.2796.
Later Wednesday, Germany is to produce preliminary data on consumer price inflation.
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