The reaction to political stress in Spain and Italy reflected on the trends of the market, as the euro fell against the dollar during Monday’s trading session, since the confidence of investors fell in the currency. In Spain, the employment data indicated that the number of unemployed people increased 132,055 to 4.98 million in the start of the year, during January, noting a sharp rise of 2.7%. With investors expressing concerns regarding the intense political crisis, the yield on ten-year Spanish bonds increased over the weekend, as the value noted on Friday, 5.21%, increased to 5.43% on Monday.
The yields on the ten-year Italian bonds also showed an increase from Friday to Monday, to 4.42%, in an environment of indecision regarding the results of imminent elections, where the former Prime Minister Silvio Berlusconi, strengthened in the opinion polls. The euro has gone a high over the past 14 months against the dollar. The EUR/USD pair did rise on Friday, following the improvement in manufacturing in the Eurozone during the month of January. The period also saw stabilization of unemployment and inflation, emphasizing a scenario that the crisis has shifted from the region.
Across the world, responses to the trend of the EUR/USD currency pair were noted. Marking 1.3549 at the morning trade in US, the currency pair, reduced 0.61%, at 1.3558. It was also expected that the pair might shore up at 1.3481.
Technical Analysis EUR/USD
Charts indicated 76.4% Fibonacci expansion, with prices breaking beyond resistance at a value of 1.3492, saw buyers inspiring for the 100% level with 1.3644. A boost over that sets a goal for 123.6% expansion with 1.3796, while the position for near-term support has been set for 1.3492. A turnaround lower than that has been estimated at 1.3397 with 61.8% Fibonacci.
In comparison to other currencies, the euro recorded a sharp downturn against the yen and pound. The losses are notable as the EUR/JPY dropped to 125.70, 0.71% and the EUR/GBP slipped to 0.8615, at 0.87%.
The euro has shown much weakness this Tuesday morning. Traders are preparing for the euro to fall further versus the yen and the pound.