Forexpros – The euro was trading close to a three-week low against the U.S. dollar on Thursday, ahead of the start of a European Union summit which few expected to deliver concrete steps to deal with the region’s debt crisis.
EUR/USD hit 1.2408 during European afternoon trade, the pair’s lowest since June 4; the pair subsequently consolidated at 1.2443, down 0.20%.
The pair was likely to find support at 1.2441, Monday’s low and a two-week low and resistance at 1.2582, the high of June 22.
Hopes that European leaders would make headway on dealing with the crisis dimmed after a German government official indicated that the summit would not result in any detailed decisions and warned against high expectations among investors ahead of the conclusion of the summit on Friday.
Earlier in the week, German Chancellor Angel Merkel reiterated her opposition to the idea of joint euro zone bonds, while EU Economic and Monetary Affairs Commissioner Olli Rehn said Wednesday that the summit would focus on short-term measures to stabilize markets and ease pressure on at-risk countries.
Adding to the negative tone, Italy saw long term borrowing costs rose to 6.19%, their highest level since December, following an auction of 10-year bonds, as investor sentiment on the country continued to deteriorate.
Meanwhile, the yield on Spanish 10-year bonds ticked up to 7%, the level that prompted Greece, Ireland and Portugal to seek international bailouts.
Elsewhere Thursday, official data showed that the number of unemployed people in Germany rose by a seasonally adjusted 7,000 in June, above expectations for an increase of 5,000, but the unemployment rate held steady at 6.8%.
The euro was also lower against the pound and the yen, with EUR/GBP sliding 0.13% to 0.7998 and EUR/JPY down 0.54% to 98.85.
Investors were looking ahead to U.S. government data on initial jobless claims and revised data on first quarter economic growth later in the session.
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