Forexpros – The euro edged higher against the U.S. dollar on Wednesday, but gains were limited amid fears over Spain’s banking crisis, while unease ahead of closely watched elections in Greece also weighed.
EUR/USD hit 1.2553 during European afternoon trade, the pair’ highest since Friday; the pair subsequently consolidated at 1.2533, up 0.24%.
The pair was likely to find support at 1.2409, the low of June 6 and resistance at 1.2624, the high of June 7.
Sentiment on the euro remained fragile amid concerns that a bailout of as much as EUR100 billion for Spain’s banks will add to the country’s debt burden and make it more difficult for Madrid to access credit markets.
The yield on Spanish 10-year bonds ticked up to 6.76% earlier, hovering just below Tuesday’s euro-era high and close to the critical 7% threshold, which is viewed as unsustainable in the long run after it prompted bailouts in Greece, Ireland and Portugal.
Investors were also jittery ahead of Sunday’s general election in Greece, which could determine the country’s future in the euro zone.
Earlier Wednesday, Italy saw one-year borrowing costs surge to the highest level since December at an auction of government bonds, amid growing fears the country will be the next euro zone member to require a bailout.
Meanwhile, official data showed that industrial production in the euro zone fell 0.8% in April, down for the second consecutive month, underlining fears over the health of the region’s economy.
The euro was up against the pound and the yen, with EUR/GBP adding 0.26% to hit 0.8050 and EUR/JPY rising 0.39% to hit 99.80.
Later Wednesday, the U.S. was to release official data on retail sales and producer price inflation, as well as a report on crude oil stockpiles.
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