Forexpros – The euro firmed up against the U.S. dollar on Tuesday, amid hopes that China would buy Italian sovereign debt, but growing fears over a Greek default and the possibility of ratings cuts on major French banks saw the single currency remain under pressure.
EUR/USD hit 1.3621 during late Asian trade, the daily low; the pair subsequently consolidated at 1.3692, easing up 0.08%.
The pair was likely to find support at 1.3493, Monday’s low and a seven-month low and resistance at 1.3860, the high of February 2.
The euro found support after the Financial Times reported that Italy had asked China to make “significant” purchases of Italian debt. Italian borrowing costs have risen significantly in recent weeks, amid uncertainty over the implementation of austerity measures.
But the euro remained weak amid expectations that ratings agency Moody’s will downgrade the ratings of France’s three largest banks, BNP Paribas, Societe Generale and Credit Agricole, later in the week because of the banks’ exposure to Greek government debt.
Elsewhere, the euro was higher against the pound, with EUR/GBP rising 0.16% to hit 0.8637.
Later in the day, Italy’s Treasury was to auction EUR7 billion of bonds maturing between 2016 and 2021. Meanwhile, the U.S. was to release official data on import prices, as well as a report on the federal budget balance.