The euro plunged on Wednesday crossed the level of 1.24 versus the US dollar on Wednesday on raise worries over the European debt crisis. The dollar index DXY which tracks the US dollar’s movement against the basked of 6 major rival currencies jumped to 83.053 on Wednesday as compared to 82.468 on Tuesday’s North American trading session.
The euro declined to 1.2360 against the US dollar on Wednesday as compared to 1.2493 on Tuesday’s North American trading session. The pair EUR/USD last reached as level lower than $1.24 bank in June 2010. Analysts think that the next support level for the pair EUR/USD stands at 1.20.
Euro fell mainly on reduced rating of Spain to B from BB- while the European Central Bank also turned down Spain’s proposal to recapitalize its one of major banks the Bankia SA. Yields on 10-year Spanish bond gained to 6.685 percent reporting the increase of 22 basis points. The yield on Spanish debt has reached their highest level since inception of the single currency which raised many concerns.
Research director, Kathleen Brooks from Forex.com commented, “There is an air of inevitability about Spain, similar to what happened with Ireland and Portugal, when the rise in their bond yields seemed unstoppable, The situation in Spain is getting ugly, a bailout could cost upwards of 380 billion euros, and we don’t even know if Germany is willing to provide this sort of cash, especially since it seems unlikely that Greece and Ireland will be able to return to the capital markets next year for financing.”
Among other currencies, the British Pound declined to 1.5488 against the US dollar on Wednesday as compared to 1.5640 on late Tuesday. Against the Japanese yen, the US dollar fell to 79.09 on Wednesday as compared to 79.49 on Tuesday’s session.
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