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Forex - EUR/JPY drops as political concerns brew in Spain

Posted: 2/4/2013 3:43:00 PM
Referenced Stocks: - The euro fell against the yen on Monday after calls for Spanish Prime Minister Mariano Rajoy's resignation arose amid talk of corruption scandals.

In U.S. trading on Monday, EUR/JPY hit 124.78, down 1.42% and up from a low of 124.67 and off a high of 126.86.

The pair sought to test support at 121.22, Tuesday's low, and resistance at 126.97, Friday's high.

Rajoy faced calls to resign in wake of corruption allegations against him and senior officials in the ruling Popular Party, which sent investors to the safety of both the greenback and the yen.

Elsewhere, Spanish employment data revealed that the number of unemployed people in January rose by 2.7%, or by 132,055, to 4.98 million, though the euro slid on uncertainty factors.

Analysts were expecting the number to rise by 150,000.

Political murkiness in Italy kept the euro lower as well, as former Prime Minister Silvio Berlusconi continues to gain ground in opinion polls.

The Italian 10-year bond yields rose to 4.42% amid the uncertainty.

The euro fell against the yen even as the Japanese currency came under increasing pressure versus other currencies amid expectations that Japanese Prime Minister Shinzo Abe would continue to pressure the Bank of Japan to step up easing measures.

The euro, meanwhile, was down against the pound and down against the Canadian dollar, with EUR/GBP trading down 1.39% at 0.8572 and EUR/CAD trading down 0.79% at 1.3489.

On Tuesday, the eurozone will produce official data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity, while Spain and Italy are to release data on service sector activity.
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