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Forex - EUR/USD pulls away from 2-month low, debt woes persist

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Forex Pros - The euro pulled back from a two-month low against the U.S. dollar on Tuesday, but remained vulnerable to further losses amid fears that the regions sovereign debt crisis could spread.

EUR/USD clawed back up from 1.4001, the day's low to hit 1.4096 during European early afternoon trade, gaining 0.34%.

The pair was likely to find short-term support at 1.3968, Monday's low and a 10-wek low and resistance at 1.4144, Monday's high.

The single currency found support after data showed that German business confidence remained unexpectedly unchanged in May as rising exports and increased company spending boosted economic growth.

The Ifo institute said its business climate index held at 114.2 from April. Economists forecast a decline to 113.7.

But worries about euro zone sovereign debt continued after Standard & Poor's cut its outlook for Italy to negative from stable on Saturday, while Sunday's defeat of Spain's ruling socialists in local elections raised concerns about the country's ability to meet fiscal targets.

The euro was also higher against the pound, with EUR/GBP rising 0.12% to hit 0.8724.

On Monday, St. Louis Federal Reserve President James Bullard said that the central bank is likely to keep interest rates on hold after the second round of quantitative easing expires next month, to give more time to evaluate the strength of the U.S. economy.

Bullard also said the U.S. economy faces potential headwinds if ongoing fears about the future of the euro create "prolonged" market turmoil.

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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.


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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