Forexpros – The euro trimmed gains against the yen on Monday, pulling away from a one-week high as concerns over Spain’s financial woes and uncertainty over the formation of a new Greek government weighed on investor confidence.
EUR/JPY pulled away from 100.85, the pair’s highest since June 11, to hit 99.60 during European afternoon, still up 0.08%.
The pair was likely to find support at 98.69, the low of June 12 and resistance at 100.85, the session high.
Sentiment on the euro remained vulnerable after the yield on Spanish 10-year bonds surged earlier to 7.13%, above the critical 7% threshold which is seen as unsustainable in the long run after it led to bailouts in Greece, Ireland and Portugal.
The spike in borrowing costs came in spite of efforts to insulate Madrid from the effects of the ongoing sovereign debt crisis by agreeing on an aid package of as much as EUR100 billion for Spanish lenders.
Meanwhile, the yield on Italian 10-year bonds ticked up to 6.06% amid fears over sovereign debt contagion.
Investors were also wary amid concerns over the ability of Greece’s pro-austerity New Democracy party to form a viable coalition government following Sunday’s narrow election victory.
Commenting on events in Greece, Japan’s vice Finance Minister Fumihiko Igarashi said earlier that he welcomed the outcome of the election in Greece but that this was only the first hurdle and Greece’s problems have not yet been solved.
Elsewhere, the yen was lower against the U.S. dollar with USD/JPY rising 0.47%, to hit 79.08.
Later Monday, leaders from the Group of 20 nations were to begin a two-day summit in Mexico.