Forexpros – The euro edged higher against the U.S. dollar on Tuesday, easing off a two-month low after better-than-expected German data and a solid Spanish government debt auction, but concerns over sovereign ratings downgrades persisted.
EUR/USD pulled away from 1.3161, the pair’s lowest since October 4, to hit 1.3204 during European early afternoon trade, easing up 0.12%.
The pair was likely to find short-term support at 1.3161, the session low and resistance at 1.3351, the high of November 25.
The ZEW Centre for Economic Research said that its index of German economic sentiment rose for the first time in ten months in December, edging up to minus 53.8 from last month’s three-year low of minus 55.2.
Analysts had expected the index to decline to minus 55.8 in December.
Meanwhile, Spain’s treasury exceeded its target, selling EUR4.94 billion in 12-month and 18-month bonds at lower yields than at a similar auction last month.
Following the auction, yields on short-dated Spanish government bonds eased, with the yield on two-year bonds declining to 4.25%.
But the yield on Italian 10-year government bonds remained above the critical 7% threshold, amid concerns over the risk of sovereign rating downgrades across the euro zone, after last week’s European Union summit failed to produce concrete plans to resolve the region’s debt crisis.
The euro was almost unchanged against the pound, with EUR/GBP edging up 0.01% to hit 0.8463.
Later Tuesday, the Federal Reserve was to announce its federal funds rate, while the U.S. was also to release official data on retail sales.
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