EURUSD has been declining since the release of disappointing euro zone investor confidence index which dropped in April.
After a previous increase for three straight months, the index fell to -14.7 in April from -8.2 in March, more than the expected drop to -8.1.
The sub-index on expectations also fell to -9.3 from -2.3 a month earlier, while a reading on current conditions decreased to -20.0 from -14.0.
“What a disappointment,” Sentix said in a statement. “After three consecutive increases the sentix index suffered a renewed setback. The decline of 6.5 points causes new question marks.”
Adding to disappointment was the German sentiment index which also fell by seven points to – 1. This was disappoint since Germany is Europe’s largest economy and has appeared to have weathered the crisis strongly so far.
Not helping the situation in Europe and weighing on the single currency is the Spanish debt situation. Yields on Spanish government 10-year bond yields are up to their highest level since early December, climbing as high as 5.83 percent. This is causing concerns amongst investors about the ability of the Spanish government to reduce its debt burden.
EURUSD touched a low of 1.3058 during the European session versus a session high of 1.3126.