Forexpros – The euro extended losses against the U.S. dollar on Wednesday falling to a two-day low as concerns that the debt crisis in the single currency bloc could deepen saw investors favor the safety of the greenback.
EUR/USD hit 1.3068 during European early afternoon trade, the pair’s lowest since Monday; the pair subsequently consolidated at 1.3076, shedding 0.38%.
The pair was likely to find support at 1.2994, Monday’s low and a two-month low and resistance at 1.3140, the session high.
The euro remained under pressure ahead of a critical auction of two and 10-year Spanish government bonds on Thursday, amid uncertainty over whether the government will be able to reduce one of the euro zone’s largest budget deficits in the face of a looming recession.
Market sentiment was boosted after an auction of short-term Spanish government debt on Tuesday raised the full targeted amount of EUR3 billion, but the country’s borrowing costs almost doubled.
Meanwhile, concerns over Spain’s troubled banking sector mounted after the country’s central bank reported that the amount of bad loans at domestic banks rose to an 18-year high in February.
Elsewhere, concerns over Portugal’s economic health intensified after Prime Minister Pedro Passos Coelho said Wednesday there were “no guarantees” that the country would meet its commitment to return to the international capital markets before September 2013.
The euro was trading close to a 19-month low against the broadly stronger pound, with EUR/GBP falling 0.69% to hit 0.8185 but held gains against the yen, with EUR/JPY up 0.24% to hit 106.37.
Earlier Wednesday, German auctioned EUR4.21 billion of two-year government bonds at a record low yield of 0.14%, as investor demand for safe haven assets remains well supported.
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