Forexpros – The euro climbed to the session high against the U.S. dollar on Monday, lifted higher by hopes that European leaders will act to tackle the debt crisis in the euro zone, but concerns over the outlook for global growth and worries about Spain’s weakening banking sector continued to weigh.
EUR/USD hit 1.2508 during U.S. morning trade, the pair’s highest since May 30; the pair subsequently consolidated at 1.2492, gaining 0.47%.
The pair was likely to find support at 1.2287, Friday’s low and a 22-month low and near-term resistance at 1.2573, the high of May 29.
The euro hit a session high against the greenback after European Central Bank Governing Council member Ewald Nowotny said he supported the idea of a European banking union.
Earlier Monday, sentiment on the euro improved after Portugal’s Finance Minister Vitor Gaspar announced that the country’s EUR78 billion bailout program was on track. Gaspar also said Lisbon is planning a EUR6.65 billion liquidity injection to shore up the country’s fragile banking system.
In addition, official data released earlier showed that producer price inflation in the euro zone was flat in April, which could give the ECB leeway to cut rates ahead of its policy meeting this week.
But investors remained wary of pushing the single currency too high amid concerns over the outlook for global growth in the wake of Friday’s dismal U.S. employment data, while worries that Spain’s high borrowing costs could force Madrid to seek a bailout also weighed.
The euro rose to a one-month high against the pound, with EUR/GBP climbing 0.27% to hit 0.8151 and posted strong gains against the yen, with EUR/JPY jumping 0.85% to hit 97.83.
Also Monday, official data showed that U.S. factory orders unexpectedly fell 0.6% in April, declining for the second consecutive month and defying expectations for a 0.2% gain.
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