Forexpros – The euro rose to a fresh session high against the U.S. dollar in choppy trade on Thursday, following the release of disappointing U.S. economic data but sentiment on the single currency remained fragile amid concerns over the deepening crisis in the euro zone.
EUR/USD hit 1.2600 during U.S. morning trade, the session high; the pair subsequently consolidated at 1.2598, up 0.33%.
The pair was likely to find support at 1.2441, Tuesday’s low and resistance at 1.2667, Monday’s high and an almost three-week high.
The U.S. Department of Labor said the number of people who filed for unemployment assistance in the U.S. last week unexpectedly increased to 386,000, against expectations for a decline of 5,000 to 375,000.
The previous week’s figure was revised up to 380,000 from a previously reported 377,000.
A separate report showed that U.S. consumer price inflation was up 0.2% in May, but core consumer prices fell 0.3%, the sharpest monthly decline since December 2008.
Bu the euro’s gains looked likely to remain short lived as the yield on Spanish 10-year bonds was at 6.92%, after briefly breaking through the critical 7% threshold earlier, a level widely seen as unsustainable in the long run.
The spike in borrowing costs came one day after ratings agency Moody’s cut Spain’s credit rating by three notches to just above junk status and warned that further cuts were possible.
Earlier Thursday, Italy sold the maximum targeted amount of EUR4.5 billion of government bonds, but the country’s three-year borrowing costs jumped to the highest level since December, pressure higher by concerns over sovereign debt contagion.
Meanwhile, investors remained jittery ahead of Sunday’s closely watched general election in Greece, amid fears that a win for anti-bailout parties could precipitate a Greek exit from the euro zone.
The euro edged higher against the pound and the yen, with EUR/GBP easing up 0.08% 0.8104 and EUR/JPY inching up 0.04% to hit 99.84.
Also Thursday, official data showed that the U.S. current account deficit widened to a seasonally adjusted USD137.3 billion in the first quarter, the largest deficit since the fourth quarter of 2008.
Analysts had expected the U.S. current account deficit to widen to USD132.3 billion in the three months to March.
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