Investor confidence in the euro was dented after an Italian government debt sale ended short of meeting the upper target range, causing borrowing costs to rise higher.
Euro dipped below the key psychological $1.3000 level as Italy’s benchmark 10-year bonds yields rose 7 basis points. The yields on the 3-year debt rose to their highest since December 2012. The political stalemate is clearly dampening sentiment towards Italian debt.
Adding to the damp mood in Europe was euro zone data showing industrial production in January across the region was lower than expected, highlighting renewed weakness in the euro region at the start of the year. IP gave a reading of negative 0.4 percent, lower than the negative 0.1 percent that was forecast, and was lower than December’s 0.9 percent increase.
EURUSD slipped to a session low of $1.2992 heading into the US session, down 0.3 percent on the day.
The pound continued to recover losses today as profit taking helped cable move away from a 2-1/2 year low of $1.4830 yesterday after weak UK manufacturing data. GBPUSD rose to a high of $1.4980 in the London session today.
Against the yen, the euro fell 0.5 percent so far to a low of 124.30 yen. The Japanese currency has been under pressure on prospects for much bolder monetary easing from the Bank of Japan but some investors were taking profits after yesterday’s decline.
Dollar was little change against yen during the Europe trade but slipped from the Asian session high of 96.09 to last trade around 95.65 from a low of 95.43 yen.