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Euro falls against dollar after Spain bond auction

Euro falls against dollar after Spain bond auction

The euro slipped from a seven-week high against the dollar on Wednesday after a disappointing Spanish bond auction and weak euro zone economic data. Optimism that Greece will receive more money from its international lenders had buoyed the euro over the past week, but the rally lost steam as worries about Spain resurfaced. The technical outlook also looked bearish after a break above $1.31, even as the euro’s recent gains have pushed it up 1.1 percent year to date.

Market are also reluctant to make big bets ahead of a policy meeting of the European Central Bank and Bank of England . While the ECB  is expected to keep its benchmark interest rate on hold at 0.75 percent, investors will be looking for clues on whether ECB President Mario Draghi will show a greater willingness to cut borrowing costs in the future as the euro zone recession deepens.

on the FX market,  the GBP/USD settled the session little changed after renewed concerns over the peripheral Eurozone put pressure on EUR and related crosses, which in turn offset the release of lower than expected UK Services PMI. Still, the report also revealed that staffing levels in the UK service sector increased for the first time in 3 months. Also, the Autumn statement from Osborne came in broadly in line with market expectation and as such had very limited impact on UK traded asset classes. In terms of technical levels, supports are seen at the 55DMA line at 1.6047 and then at 1.6039 which is the 10DMA line. On the other hand, resistance levels are seen at 1.6133/76 and then at 1.6200.

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