Forexpros – The euro rose to a session high against the U.S. dollar on Thursday, as the yield on Spanish 10-year bonds fell to intra-day lows following an auction of Spanish government debt, ahead of a critical European Central Bank meeting later in the day.
EUR/USD hit 1.2296 during European trade, the session high; the pair subsequently consolidated at 1.2289, gaining 0.53%.
The pair was likely to find support at 1.2216, the session low and resistance at 1.2335, Wednesday’s high.
Spain successfully auctioned EUR3.13 billion of government bonds, the top end of the targeted range, but saw borrowing costs push rise, while demand was weaker.
Spain’s Treasury sold EUR1.05 billion of 10-year bonds at an average yield of 6.64%, slightly up from 6.43% last month.
Demand was lower than the previous auction, with bid-to-cover ratio at 2.4 compared to 3.2 a month earlier.
Following the auction, the yield on Spanish 10-year bonds dropped back to an intra-day low of 6.64%, while the yield on Italian 10-year bonds rose to 5.82%.
The euro found support ahead of the upcoming ECB meeting, amid growing expectations for intervention by the bank to contain the debt crisis in the euro zone.
Expectations that the ECB may resume its bond buying program, to help lower Spanish and Italian borrowing costs, have been building since EBC President Mario Draghi pledged last week to do whatever it takes to preserve the euro.
In July, the ECB cut its benchmark interest rate to a record low 0.75%, in order to ease pressure on the bloc’s economy.
The euro was also higher against the pound and the yen, with EUR/GBP up 0.44% to 0.7904 and EUR/JPY rising 0.30% to 96.15.
Later Thursday, the U.S. was to release official data on initial jobless claims.
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