Forexpros – The euro was higher against the U.S. dollar on Tuesday, but gains in the single currency were capped by concerns over the mechanics of Spain’s bank bailout and uncertainty over the outcome of this weekend’s Greek general election.
EUR/USD hit 1.2529 during European afternoon trade, the session high; the pair subsequently consolidated at 1.2506, gaining 0.20%.
The pair was likely to find support at 1.2409, the low of May 6 and resistance at 1.2573, Friday’s high.
The euro found support as market sentiment firmed up, but investors remained wary of pushing the single currency too high as questions remained over the source of Spain’s rescue funds and whether the bailout repayments would add to the country’s already high borrowing costs.
The yield on Spanish 10-year bonds climbed to 6.64% earlier, hovering close to the critical 7% threshold, which is seen as unsustainable in the long term.
Investors also remained jittery ahead of Sunday’s general election in Greece, which could decide the course of the country’s future in the euro zone.
The euro was higher against the yen, with EUR/JPY rising 0.42% to hit 99.58 but slipped lower against the pound, with EUR/GBP losing 0.12% to hit 0.8050.
The yen weakened against the euro and the dollar earlier after the International Monetary Fund said the yen was “moderately overvalued,” and indicated that it supported Japan’s view on yen weakening interventions, given current market conditions.
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