Forexpros – The euro traded flat to higher against the safe-haven yen in choppy trading on Tuesday as bottom fishers bought the pair after it fell on concerns that Spain’s sky-high borrowing costs may be signaling the need for a bailout.
In Asian trading on Tuesday, EUR/JPY hit 99.53, up 0.02%, up from a low of 99.39 and off a high of 99.64.
The pair sought to test support at 99.13, the low of June 18, and resistance at 99.79, the high from June 12.
In Spain, the yield on the 10-year note shot up above 7% ealier, the highest since the launch of the euro.
Yields at around 7% tend to depict a country in need of a bailout, similar to ones arranged for Greece, Ireland and Portugal.
Eurozone finance ministers recently arranged a EUR100 billion bailout facility for Spain to use to recapitalize its banks, but talk the country itself will need rescuing continued to grow.
Meanwhile in Italy, the yield on Italian 10-year bonds hit 6.10% on concerns that sovereign debt contagion was headed towards the eurozone’s fourth largest economy.
Yields sent the euro falling earlier on fears that despite a market-friendly turnout in Greek elections over the weekend, the debt crisis is far from ending.
In Greece, the conservative New Democracy political party edged out the leftist Syriza and must now patch together a coalition government that will lead the country out of the debt crisis.
The euro, however, rebounded amid bottom fishing and on uncertainty surrounding the Federal Reserve’s upcoming monetary policy meeting that runs June 19-20.
Talk the Fed may considering stimulating the economy via easing measures pressured the dollar downward in early Asian trading.
The euro, meanwhile, was up against the pound and down slightly against the Canadian dollar, with EUR/GBP trading up 0.06% at 0.8032 and EUR/CAD down 0.02% and trading at 1.2880.
Later Tuesday in the eurozone, the ZEW Institute is to release reports on economic sentiment in Germany and the whole currency union.
Leaders from the Group of 20 nations are to hold a second day of talks at a summit in Mexico.
In the U.S., the Federal Reserve will open its two-day monetary policy meeting.
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