Forex Pros – The euro extended early gains against the U.S. dollar on Tuesday, advancing to a fresh 16-month high, boosted after an auction of Spanish government debt met with strong investor demand.
EUR/USD hit 1.4652 during European late morning trade, the pair’s highest since December 15 2009; the pair subsequently consolidated at 1.4613, gaining 21%.
The pair was likely to find support at 1.4327, the low of April 20 and resistance at 1.4775, the high of December 12, 2009.
Earlier in the day, Spain’s Treasury sold EUR1.97 billion of the short-term bills with the average three-month yield jumping to 1.37% compared to 0.89% in March and six-month rates to 1.86% from 1.36%.
Speculation that Greece may have to restructure its debt, denied by officials, and talks on the euro zone’s third bailout in a year in Portugal have pushed up Spain’s refinancing costs and fuelled concerns it may be next.
Also Tuesday, European Central Bank President Jean-Claude Trichet said he “entirely” shared the U.S.’s view that a strong dollar is in the U.S. interest.
The euro was also higher against the pound, with EUR/GBP rising 0.30% to hit 0.8864.
Later in the day, the U.S. was to publish reports on house price inflation and consumer confidence, as well as official data on manufacturing activity in Richmond.
ForexPros.com
