The European single currency pared three days of advance to return back to the lowest level in four years versus the greenback after Bank of Spain announced that CajaSur, a saving bank that suffers from property loan defaults, will be controlled by the government which aroused skeptics with regard banking system stability in the euro area, adding to the initial debt concerns spreading in the region.
On the other hand, the dollar strengthened against a basket of major currencies as seen by the dollar index which rose to 86.30 from the day's opening at 85.61 after breaching strong resistance at 85.95.
With regard to the euro-dollar pair, it retreated after inclining in the previous three sessions, but it stopped its decline as it approached support at 1.2328, while banks are shut down today for the Whit Monday Holiday. The issue of the bank of Spain added to fears stemming from the huge debt in European economies. Following the $1.1 trillion introduced two weeks ago, EU officials met last week in Brussels and agreed to put tough sanctions on any highly indebted country that violates the EU rules. Despite the introduced measures by the EU, the euro is not able to rebound as concerns that these policies will not able to contain the debt dilemma are persisting and thereby prompting investors to sell the euro. Meanwhile, the pair is trading at 1.2384, recording a high of 1.2563 and a low of 1.2349, while for the rest of the day the pair is predicted to move between support and resistance at 1.2270 and 1.2410 respectively.
As for the sterling-dollar pair, it fell to 1.4388, but halted its drop as it touched support at 1.4333. Today, U.K. government led by Cameron introduced the first public-spending cuts worth 6.24 billion pounds to lower the highest deficit among the G7 countries. However, worries that the high debt may affect recovery are still putting downside pressure on the sterling. Now, the pound is trading near the lowest level in 13 months versus the greenback, after recording a high of 1.4527 and a low of 1.4350, whereas it is expected to move between support at 1.4345 and resistance at 1.4415.
Relative to the dollar-yen pair, it is moving north on the daily charts after breaching support at 90.34. The dollar is showing advance against the yen ahead of the release of existing home sales which is estimated to rise annually to 5.65 million in April compared with 5.35 million a month earlier. The pair is currently trading at 90.42 after hitting a high of 90.54 and a low of 89.73, while support is seen at 90.00 and resistance is at 91.60.