The euro was under pressure ahead of the closely watched EU summit, which begins later in the day.
The common currency fell sharply in the European session as the number of unemployed people in Germany rose by more than expected and Spanish 10-year bond yields climbed to an unsustainable level of 7 percent.
Traders keep their eyes on the EU Summit, where a number of issues ranging from debt reorganization to banking union as well as a potential renegotiation of Greece’s bailout terms are expected to be discussed.
No quantum leap is expected immediately and the market is already adopted a cautious mindset that the eurozone crisis continues to remain a stumbling block in the recovery process.
French President Francois Hollande and German Chancellor Angela Merkel said at a meeting in Paris on Wednesday that they must find ways to deepen the integration of Europe.
However, the solution still seems a distant dream owing to the fact that no credible resolutions emerged even after the EU leaders met around 20 times in the past 2-years after the Greece crisis sprouted.
Today’s disappointing German unemployment data added pressure on the already struggling euro. Although the think-tank Ifo projected a faster-than expected 0.7 percent growth for the German economy in 2012, it observed that the increased uncertainty in Eurozone continued to dampen German economic momentum.
The common currency moved closer to the psychologically important mark of 1.24 against the dollar for the first time in more than 3-weeks. The next key level to watch on the downside is 1.23.
Against the yen, the euro retraced from its resistance level above the 101.60 to a more than 3-week low of 98.35. The near-term support for the euro-yen pair is seen around the 98.0 level.
Japan’s retail sales rose 3.6 percent year-over-year in May, faster than the 3 percent increase forecast by economists, data from the Ministry of Economy, Trade and Industry showed.
While retail sales have now increased for six straight months, the report showed that sales growth in May eased to a three-month low, suggesting slow growth in private consumption amid intensifying eurozone woes.
The single currency erased its Asian session gains against the pound, falling from a 2-day high of 0.8032 to as low as yesterday’s bottom at 0.7988. Against the franc, the euro traded in its recent ranges between 1.2015 and 1.2012.
The U.K. economy entered a double-dip recession in the first quarter as previously estimated, final data from the Office for National Statistics revealed today.
Gross domestic product fell 0.3 percent quarter-on-quarter, in line with the estimate released on May 24. But the decline for the fourth quarter of 2011 was revised to 0.4 percent from 0.3 percent.
Two straight quarters of contraction signals a recession. Also, the economy entered a double-dip recession for the first time since 1970s.
Looking ahead, the U.S. first quarter final GDP data and the weekly jobless claims for the week ended June 23 are due in the New York morning session.