Forex - EUR/USD hits 1-week low on Spain, Italy concerns

The euro fell to a one-week low against the dollar on Tuesday as renewed political tensions in Spain and Italy pushed the single currency further back from last week’s 14-month highs.

EUR/USD hit 1.3462 during late Asian trade, the pair’s lowest since January 29; the pair subsequently consolidated at 1.3472, shedding 0.30%.

The pair was likely to find support at 1.3348, the low of January 25 and resistance at 1.3519, the session high.

Fresh political uncertainty in Spain and Italy revived fears over the debt crisis in the region, pushing peripheral borrowing costs higher and undermining investor confidence in the single currency.

Spanish Prime Minister Mariano Rajoy faced calls to step down following allegations of corruption against him and senior officials in the ruling Popular Party, while uncertainty over the outcome of upcoming Italian elections mounted as former Prime Minister Silvio Berlusconi gained ground in opinion polls.

Investors were also cautious ahead of the outcome of the European Central Bank’s policy meeting on Thursday.

The euro was weaker against the yen, with EUR/JPY down 0.48% to 124.23 and slipped lower against the pound with EUR/GBP dipping 0.12% to 0.8562.

The euro zone was to produce official data on retail sales later Tuesday, while Spain and Italy were to release data on service sector activity. 

In the U.S. the Institute of Supply Management WAs to publish a report on  service sector activity.

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