Forex - Euro pushes higher against dollar

The euro pushed higher against the dollar on Monday as bond yields across the euro zone continued to fall with investors moving away from Japanese bonds into higher yielding assets.

EUR/USD hit 1.3033 during European afternoon trade, the session high; the pair subsequently consolidated at 1.3027, gaining 0.18%.

The pair was likely to find support at 1.2967, the session low and resistance at 1.3075, the high of March 12.

The yields on French, Belgian, Austrian and Dutch 10-year government bonds fell to record lows, while the yield on Spanish two-year bonds fell below 2% for the first time since October 2010.

The yield on Portuguese 10-year bonds bucked the trend rising to 6.39% after the country’s constitutional court blocked parts of the government’s austerity plan.

The euro showed little reaction after official data showed that German industrial output rose 0.5% in February compared to expectations for a 0.3% increase. 

January’s figure was revised down to a decline of 0.6% from an initial flat reading.

The single currency was up more than 1% against the broadly weaker yen, with EUR/JPY rising 1.23% to 128.37 as the Bank of Japan embarked on its new monetary stimulus plan.

The BoJ conducted its first government bond purchasing operation on Monday, purchasing JPY1.2 trillion of Japanese government bonds maturing in five years or more.

Last week the BoJ said it plans to double its asset purchase program over the next two years and extend the maturities of the bonds it purchases in a bid to achieve its 2% inflation target.

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