Euro extended lower against the dollar early in the Asian session but the the momentum in the big sell-off eased and consolidation ensued. Euro has lost over 1 percent since opening on Monday, as concerns over the euro zone debt crisis returned. The initial optimism from the announcement of a bailout for Spain’s banks quickly faded as investors realized it won’t tame the European debt crisis and they worry that the country is being burdened with even more debt. Meanwhile the upcoming Greek election on Sunday, June 17 is also weighing on the market’s mood. Adding to fears is growing concern that Italy may be next to need a bailout.
EURUSD opened in Asia at 1.2481 and dipped early to a low of 1.2449 before retracing as it was due for a correction after a more than 1 percent drop on Monday.
GBPUSD dropped to a low of 1.5460 before bouncing to 1.5494 where the pair is likely to consolidate.
USDJPY ended the session back where it began, recovering the session’s losses. The pair opened in Asia at 79.42 and fell to 79.15 before jumping back up to 79.59. The yen erased gains after comments by the IMF which raised speculation that the Bank of Japan will intervene to weaken the Japanese currency. The BOJ has a scheduled two-day policy meeting on June 14-15, and could ease monetary policy further. The weakening yen helped euro recover losses, with EURJPY bouncing from a low of 98.69 to 99.53.
Aussie was sold off quite hard on Monday and is now retracing due to some profit-taking, which brought AUDUSD to 0.9900 from a session low of 0.9848.