Forex Review – European session open – Euro steady ahead of Italy bond sale

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Euro has been trading in a range against the dollar since Tuesday as market participants are cautious ahead of Italy’s bond auction today, as well as Greek elections on Sunday. There is concern that Italy will be next in line to require a bailout but Italian Prime Minister Mario Monti reiterated that Italy is not in danger.

Meanwhile, Spanish bond yields continue to hover near record highs, after Spain requested a bailout to shore up its troubled banks. The 100 billion euro financial assistance will add to the government’s already large debt load.

During the Asian session, EURUSD slid down to 1.2472 from the 1.2502 open level. Going into the European return, the pair edged up slightly to open at 1.2489 and rose to an early high of 1.2497.

Sterling retraced against the dollar after a sharp rally yesterday. GBPUSD opened in Asia at 1.5568 and eased to  1.5539 where it has found support .

USDJPY has been trading sideways since yesterday, finding support above 79.50 since the start of Asian trading today and capped at 79.67.

EURJPY has been forming a narrower range, trading the Asian session between 99.29 and  99.67

Aussie was also barely changed, trading in a range with support at 0.9929 and peaking at 0.9969. Moody’s said early today that the outlook for Australia’s Aaa rating remained stable due to the strength of its economy, institutions and government finances.

Looking ahead, the European session is expected to be quiet since there are no key events on the economic calendar until Italy’s bond sale.. German inflation data were released at the European session open at 06:00 GMT, showing inflation remained steady in May. Euro showed little reaction to the data. Euro zone industrial production data are due later at 09:00 GMT but have low importance and will not likely move euro much. Depending on the results of the Italian bond sales, there could be some volatility in the euro.