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Forex - EUR/USD extends losses after Trichet remarks

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Forexpros - The euro extended losses against the U.S. dollar on Thursday, falling to a 12-day low after European Central Bank President Jean-Claude Trichet said the bank will conduct more cash operations to provide liquidity to banks as the region's debt crisis escalates.

EUR/USD hit 1.4128 during U.S. morning trade, the pair's lowest since July 19; the pair subsequently consolidated at 1.4157, dropping 1.14%.

The pair was likely to find support at 1.4013, the low of July 18 and resistance at 1.4370, the day's high.

Trichet said the ECB will lend euro-area banks as much money as they need for six months and extend its existing liquidity measures through the end of the year, as pressure increases on policymakers to resume bond purchases.

The central bank kept its benchmark interest rate at 1.5% earlier in a widely anticipated decision. ECB rates are still "accommodative" and inflation risks "remain on the upside," Trichet said.

While acknowledging a "particularly high" level of uncertainty, Trichet said inflation expectations "must remain firmly anchored."

Concerns over the risk of sovereign debt contagion in the euro zone intensified earlier after Spain's Treasury auctioned EUR3.3 billion of bonds at higher interest rates than at an auction last month.

Following the auction, the yield on Spanish 10-year bonds neared 7%, the threshold that heralded the bailouts of Greece, Portugal and Ireland.

The shared currency fell sharply against the greenback earlier, after Japanese authorities stepped into currency markets for the first time since March to curb the yen's gains, amid concerns that the currency's appreciation would hinder the largely export-based economy's recovery from a downturn sparked by the March 11 earthquake and tsunami.

In addition, the Bank of Japan announced additional monetary easing in order to support the Finance Ministry's intervention to weaken the yen.

The euro was also down against the pound, with EUR/GBP shedding 0.63% to hit 0.8662.

Elsewhere Thursday, official data showed that the number of people who filed for unemployment assistance in the U.S. last week fell unexpectedly.

The Labor Department said the number of individuals filing for initial jobless benefits in the week ending July 29 fell by 1,000 to a seasonally adjusted 400,000, confounding expectations for an increase to 406,000.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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