Forexpros – The euro traded flat to lower against the dollar in early Asian trading, not far from a two-year low against the greenback on fears the European debt crisis is reaching a boiling point in Spain and a bailout there will soon be in order.
In Asian trading on Wednesday, EUR/USD was trading down 0.02% at 1.2059, up from a low of 1.2058 and off from a high of 1.2065.
The pair was likely to find support at 1.2043, the low from July 24, and resistance at 1.2138, the high from July 24.
Concerns that Spain will need a bailout continued to build on Wednesday.
The yield on Spanish 10-year bonds rose earlier to a euro-era high of 7.60%, well above the 7% threshold considered unsustainable by the markets.
Eurozone policymakers recently allocated EUR100 billion for Spain to prop up its banking sector and regional governments as well, though markets quickly brushed off the good news and decided the country is suffering from too much debt and not enough growth as a whole, and will need a lifeline itself.
Disappointing output data pushed the euro down to fresh lows before it later snapped back somewhat in Asian trading.
The Markit research group reported that its preliminary German manufacturing purchasing managers’ index dropped to 43.3 in July from a final reading of 45.0 in June.
Markets were expecting the index to increase to 45.3.
Meanwhile, Markit’s manufacturing index for the eurozone as whole contracted at the fastest pace since May 2009, dropping to 44.1 in July from 45.1 in June, below a 45.3 forecast.
Fears of a near European meltdown eclipsed otherwise positive output data out of China, where the country’s HSBC manufacturing purchasing managers index jumped to 49.5 in July, its highest level since February, from a final reading of 48.2 in June.
A decision by the Moody’s ratings agency to lower its outlooks for Germany, the Netherlands and Luxembourg to negative from stable also kept the euro lower.
Meanwhile, representatives from the European Union and the International Monetary Fund continued to hold talks with the Greek government to discuss game plans to improve the economy and keep the debt-weary nation in the eurozone.
The euro, meanwhile, was up against the pound and down against the yen, with EUR/GBP up 0.06% at 0.7783, and EUR/JPY trading down 0.07% at 94.23, a low not seen in 12 years.
Later Wednesday in the eurozone, the Ifo Institute for Economic Research will release data on Germany’s business climate.
Also Wednesday, the U.S. will publish official data on new home sales, a leading indicator of economic health, as well as data on crude oil stockpiles.
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