Yahoo Finance Euro Bounces From Day’s Lows, Remains under Pressure
Investing.com - The euro bounced off the worst levels of the day on Tuesday after comments by the leader of Italy’s Five Star political party calmed investors’ concerns over the prospect of an Italian exit from the euro zone.
EUR/USD was trading at 1.1553 by 06:41 AM ET (10:41 AM GMT), still down 0.58% for the day after falling as low as 1.1511 earlier, the weakest since July 20, 2017.
The single currency found some support after Italy’s Five Star leader Luigi Di Maio said comments on Facebook that he never sought a euro exit.
The comments came as Italian bond yields rose rapidly amid a deepening political crisis which sparked fears over a euro zone breakup.
Italy’s President Sergio Mattarella blocked the nomination of a euro sceptic finance minister on Sunday, prompting Italy’s populist parties to abandon their bid to form a coalition government and paving the way for fresh elections later this year.
Investors fear that fresh elections could be seen as a referendum on Italy's role in the European Union and may end up bolstering anti euro parties even more.
The euro also found some support after ratings agency Moody’s said Tuesday that political developments in Italy in the last few days have no bearing on its recent decision to put the country’s debt rating on review for a downgrade.
Meanwhile, investors were continuing to monitor political developments in Spain, where Prime Minister Mariano Rajoy is facing a vote of no confidence in the government on Friday, after a corruption case involving members of the ruling party.
The euro pared back losses against the safe haven yen, with EUR/JPY down 1.18% at 125.77 after falling as low as 125.06 earlier, the weakest since late June.
The single currency has fallen around 4.7% against the yen so far this month and is down around 4.2% against the U.S. dollar.
The euro trimmed losses against the traditional safe haven Swiss Franc, with EUR/CHF down 0.6% to 1.1486, off lows of 1.1447.
The dollar eased back from three week lows against the firmer yen, with USD/JPY last at 108.76.
The pair hit a high of 109.82 on Monday amid optimism that a planned summit between the U.S. and North Korea appeared to be back on track, but gains were quickly erased amid worries over euro zone political concerns.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was up 0.39% at 94.74, the strongest level since mid-November on the back of the weaker euro.
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