Forexpros – The euro trimmed losses against the yen on Monday, pulling away from a two-month low after mixed U.S. economic data and a better-than-expected trade balance report from the euro zone supported demand for riskier assets.
EUR/JPY pulled back from 104.66, the pair’s lowest since February 17, to hit 105.32 during European afternoon trade, still down 0.47%.
The pair was likely to find support at 104.19, the low of December 1 and resistance at 106.55, the high of February 22.
Risk appetite found support after official data showed that retail sales in the U.S. increased more-than-expected in March, building on the previous month’s strong gain.
The Commerce Department said that retail sales rose by a seasonally adjusted 0.8% in March, beating expectations for a modest 0.3% gain.
February’s figure was revised to a 1.0% increase from a previously reported gain of 1.1%.
Core retail sales, which exclude automobile sales, rose by 0.8% last month, above expectations for a 0.6% gain, after rising by 0.9% in February.
A separate report showed that an index of manufacturing conditions in New York deteriorated in April, growing at the slowest pace since November.
The Federal Reserve Bank of New York said that its general business conditions index declined by 13.6 points to 6.6 in April from 20.2 in March.
Analysts had expected the index to decline by 2.2 points to 18.0 in April.
The euro briefly dipped below the 1.30 level against the dollar earlier Monday after the yield on Spanish 10-year bonds climbed above 6% amid concerns that the government will be unable to meet deficit reduction targets.
European Commission president Jos? Manuel Barroso said Monday that he was “absolutely confident that Spain can meet its economic challenges”.
Investors looked set to remain cautious ahead of an auction of two and 10-year Spanish governments bonds later in the week, which was being seen as a key test of market appetite for the country’s debt.
Meanwhile, speculation continued over whether the European Central Bank would resume purchasing government bonds on the secondary market in order to ease mounting pressure on Spain.
Elsewhere, the yen was higher against the U.S. dollar with USD/JPY shedding 0.21%, to hit 80.74.
Later in the day, the U.S. was to release official data on net long-term securities transactions and business inventories.
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