The euro fell for the second day versus the greenback after the bank of Spain said that four Spanish saving banks with more than 135 billion euros in assetsare planning to merge to dilute risks as they all suffer from toxic property and mortgage loans. The IMF urged bank of Spain to revamp banking system in the country to maintain financial stability in the region. The problems increased in Europe as the huge deficit prevailing in the region which triggered the launch of $1 trillion bailout to highly indebted countries is raising concerns that recovery may falter.
On the other hand, the dollar index, which tracks the dollar movements versus a basket of major currencies, rebounded today to 87.19 from the day's opening at 86.37 as the breach of resistance at 85.95 yesterday paved the way for further incline.
With regard to the euro-dollar pair, it retreated to 1.2215 where it is currently traded, but it stopped its decline as it approached strong support at 1.2123. The issue of the bank of Spain added to fears stemming from the huge debt in European economies which caused the European single currency to drop for the second day. The pair recorded a high of 1.2371 and a low of 1.2175 earlier today, while it is predicted to move between support and resistance at 1.2180 and 1.2250 respectively.
As for the sterling-dollar pair, it fell to 1.4327, but still unable to remain below support at 1.4333 that the pair has been hovering around over the past six sessions. Despite the upbeat growth data released today that showed that the British economy grew 0.3% in the first quarter, debt concerns caused the pair to move south. The Queen in her Speech today said the new government's top priority is cutting the deficit and boosting growth. Now, the pound is trading at 1.4327, after recording a high of 1.4422 and a low of 1.4256, whereas it is expected to move between support at 1.4230 and resistance at 1.4390.
Relative to the dollar-yen pair, it is moving to the downside as debt worries prompted investors to leave risky assets and buy the yen as a refuge. However, the dollar minimized its losses against the yen after getting support at 89.27. The pair is currently trading at 89.41 after hitting a high of 90.30 and a low of 89.24, whereas support is seen at 89.00 and resistance is at 90.00.