Forexpros – The euro turned lower against the U.S. dollar on Monday, after posting the largest one-day gain since last October on Friday, amid concerns over the long-term effectiveness of a European agreement to tackle the debt crisis in the euro zone.
EUR/USD hit 1.2612 during late Asian trade, the session low; the pair subsequently consolidated at 1.2618, shedding 0.33%.
The pair was likely to find support at 1.2518, the low of June 22 and resistance at 1.2692, Friday’s high and a six-day high.
On Friday, European Union leaders agreed to use the euro zone’s bailout funds to support struggling banks directly, without adding to national debt and also agreed to set up a joint banking supervisory body for the euro area.
In addition to the direct recapitalization of Spain’s banks, euro zone bailout funds will be able to purchase government debt in order to keep down borrowing costs.
Markets rallied following the announcement, with the euro jumping 1.75% against the dollar, the largest one-day gain in eight months.
But market sentiment cooled on Monday, as details about how and when European leaders can put the newly agreed measures into practice still remained uncertain.
Investors were also beginning to focus on Thursday’s European Central Bank policy meeting, amid growing expectations for a rate cut, as well as Friday’s U.S. nonfarm payrolls data.
The euro inched lower against the pound, with EUR/GBP dipping 0.06% to 0.8056 and was weaker against the yen, with EUR/JPY shedding 0.58% to trade at 100.45.
Later in the day, the euro zone was to release official data on the unemployment rate. In the U.S., the Institute for Supply Management was to release a report on manufacturing activity.
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