Forex Review – Euro tumbles on Spain debt concerns

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The euro erased earlier gains against the dollar and touched a new 22-month low during the U.S. session  amid concerns over the euro zone sovereign-debt crisis. Fears of contagion within the euro region grew after news reports of Spain’s wealthiest autonomous region, Catalonia, asking for financial aid to refinance its debt this year. This Spanish region’s troubles come just as Spain’s fourth-biggest bank, Bankia,  is about to receive a bailout valued at more than 15 billion euros from the Spanish government, meaning the government may have to take on more debt  and it  cannot afford to do so. Meanwhile investors fret about a  possible Greek exit from the euro.

EURUSD tumbled to 1.2495, its lowest level since July 2010. EURJPY fell near three-month lows,  tumbling to 99.46 in the U.S. session.

GBPUSD fell to a new two-month low of 1.5629, the lowest since March 13.

The safe haven dollar benefitted during risk aversion and USDCHF hit a three-month high of 0.9610 in New York trading. The dollar was also boosted after a University of Michigan survey showed U.S. consumer sentiment rose to its highest level in more than four years in May.

The Canadian dollar weakened to its lowest level against its U.S. counterpart as euro zone worries dented sentiment. USDCAD climbed to 1.0303 in the late North American session, up 0.4 percent on the day.

USDJPY opened the U.S. session near the lows of the day at 79.48 and edged up to high of 79.67.

AUDUSD opened in New York  near the highs of the day in the o.9780/85 region as EURAUD selling head of the long U.S.  holiday weekend kept the aussie supported.