Forexpros – The euro ticked up and down between small gains and losses against the U.S. dollar on Tuesday, as markets looked ahead to U.S. economic data, after finding support earlier following a moderately successful Spanish bond auction and robust German data.
EUR/USD hit 1.3171 during European early afternoon trade, the pair’s highest since Friday; the pair subsequently consolidated at 1.3144, inching up 0.02%.
The pair was likely to find support at 1.2994, Monday’s low and a two-month low and resistance at 1.3171, the session high.
The euro found support earlier after a closely watched auction of Spanish short-term government bonds saw borrowing costs almost double, but the country raised the full targeted amount of EUR3 billion.
Spain’s Treasury sold EUR2.09 billion worth of 12-month government bonds at an average yield of 2.62%, up from 1.41% at a previous auction, and EUR1.09 billion of 18-month bills at an average yield of 2.93%, up from 1.71%.
But investors remained wary of pushing the euro too high as concerns that Spain’s government will not be able to meet deficit reduction targets in the face of a looming recession persisted.
Meanwhile, a report showed that German economic sentiment improved unexpectedly in April, rising for the fifth consecutive month.
The ZEW Centre for Economic Research said that its index of German economic sentiment increased to 23.4 in April from the previous month’s reading of 22.3. Analysts had expected the index to decline to 20.0.
A separate report showed that the rate of consumer price inflation in the single currency bloc was 2.7% in March, up from a preliminary estimate of 2.6% and unchanged from February.
Month-on-month, CPI rose 1.3%, above expectations for a 1.2% increase after rising by 0.5% in February.
The euro was hovering close to a 19-month low against the broadly stronger pound, with EUR/GBP shedding 0.34% to hit 0.8237 but pushed higher against the yen, with EUR/JPY adding 0.45% to hit 106.13.
Later in the day, the U.S. was to produce government data on building permits, housing starts and industrial production.
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