Forexpros – The euro trimmed gains against the U.S. dollar on Monday, as a relief rally sparked by news that Spain had received a bailout for its banks ebbed amid sustained concerns over the ongoing sovereign debt crisis in the euro zone.
EUR/USD pulled back from 1.2669, the pair’s highest since May 23, to hit 1.2541 during European early afternoon trade, still up 0.20% on the day.
The pair was likely to find support at 1.2434, Friday’s low and near-term resistance at 1.2687, the high of May 23.
The euro strengthened broadly earlier after euro zone finance ministers agreed at the weekend to grant Spain a loan of up to EUR100 billion, which the government will use to recapitalize the country’s ailing banking sector.
But initial optimism faded as details of the Spanish bailout agreement remained unclear, with the amount Madrid will receive to be decided after the results of independent banking audits are published later this month.
Meanwhile, investors remained focused on the outcome of a Greek general election this weekend, which could determine if the country is to remain on in the euro zone.
The euro pared gains against the yen, with EUR/JPY up just 0.19% to trade at 99.63, off an earlier high of 100.92, and erased gains against the pound, with EUR/GBP shedding 0.25% to hit 0.8070.
Also Monday, official data showed that French manufacturing output fell 0.7% in April, while Italy’s gross domestic product contracted by 0.8% in the first quarter, underlining concerns that economic growth in the euro area is faltering.
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