Forexpros – The euro was down against the U.S. dollar on Wednesday, retreating from a one-week high as Italian and Spanish short-term borrowing costs crept higher despite a huge injection of liquidity by the European Central Bank earlier in the day.
EUR/USD pulled back from 1.3196, the pair’s highest since December 13, to hit 1.3052 during U.S. morning trade, slipping 0.22%.
The pair was likely to find support at 1.2992, Tuesday’s low and resistance at 1.3196, the days high.
The yield on the two-year Italian bond rose to 4.93% having traded as low as 4.69% earlier, while two-year Spanish bond yields rose to 3.30%, from an earlier low of 3.14%.
Earlier in the day, the ECB allotted EUR489.19 billion in three-year loans to 523 European banks in an attempt to avert a liquidity crunch in the euro zone.
It is hoped that the funds may also be used by lenders to purchase the sovereign debt of indebted euro zone states, easing pressure on borrowing costs.
The amount allotted was the largest ever for a longer-term refinancing operation by the ECB and underlined concerns over the scale of the financial crisis in the euro zone.
The euro was also lower against the pound, with EUR/GBP shedding 0.27% to hit 0.8330.
Also Wednesday, a report by the National Association of Realtors said that U.S. existing home sales rose by 4% to a seasonally adjusted 4.42 million units in November, falling significantly short of expectations for a gain of 15.5% to 5.03 million units.
Existing home sales in October were revised down by nearly 14% to 4.25 million units from a previously reported 4.97 million.
Forexpros
