Forexpros – The euro fell from nearly a one week high against the dollar Wednesday on a report indicating slowing inflation and Italy’s largest bank stating it needs more capital.
EUR/USD hit a low of 1.2898 during U.S. trade. The pair is off a high of 1.3073 and is currently trading at 1.2935 up 0.90%. The pair was likely to find support at 1.2826 and technical resistance exists at 1.3249.
The single currency bearishness was triggered when Italy’s largest bank UniCredit said it will sell shares to raise USD9.8 billion while the European Central Bank revealed that overnight deposits from financial institutions hit an all time high.
A report on euro zone inflation indicated that it slowed to 2.8% in December from a three year high in November.
Rumors that Spanish Prime Minister, Mariano Rajoy may apply for ECB and International Monetary Fund loans added to the negative euro sentiment. However, official sources denied the speculation.
Paul Robinson of Barclay’s explained his bearish stance to Bloomberg, “The euro may depreciate to $1.20 by year end as the ECB cuts interest rates. The ECB may lower its 1% refinancing rate to 0.5% this quarter.”
Meanwhile, U.S. factory orders rose the most in four months during November adding safe haven strength to the greenback.
The Euro dropped against the pound with EUR/GBP giving back 0.66% to 0.8285.
Investors are awaiting U.S. oil stockpile and unemployment data on Thursday.
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