The euro climbed against the U.S. dollar and other major currencies on Tuesday after news reports said Spain was considering applying for a credit line from the European Union’s bailout fund, although the timing of such a move remained unclear.
The shared currency EURUSD +0.82% changed hands at $1.3014, up from $1.2953 in North America on Monday.
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An unnamed Spanish Finance Ministry official told international press late Monday that Spain was looking for support from its euro-zone partners to push ahead with the bailout request, but that the government was uncertain of unanimous backing over worries that nervous investors could then turn their sights on Italy, The Wall Street Journal reported.
Several analysts have said that a formal request for a financial bailout from Madrid would only serve to boost the euro, as it would contain the euro-area’s debt crisis and prevent a worse outcome.
But others said Spain’s continuing delay could rob the European Central Banks bond-buying plan, known as outright monetary transactions, or OMTs, of its potential upside impact.
“The longer Spain attempts to ‘game the market,’ with talk of action, the lower the likely post-OMT announcement bounce the euro is likely to see,” said Jeremy Stretch, currency strategist at CIBC in London. “For now, though, we would not expect any rallies to breach $1.3050 to $1.3060.”
The euro posted little lasting, initial reaction to a stronger-than-expected rise in the German ZEW investor exactions index in October to -11.5. See: German ZEW investor expectations gauge rises .
ICE dollar index DXY -0.46% , which measures the greenback against a basket of six major global currencies, dropped to 79.501 from 79.711.
The WSJ Dollar index XX:BUXX -0.34% , a gauge of the U.S. unit’s moves against a slightly wider currency basket, fell to 69.66 from a Monday close of 69.79.
Among other major currency pairs, the British pound GBPUSD +0.30%climbed to $1.6077 from $1.6071, while the Australian dollarAUDUSD +0.16% inched up to $1.0272 from $1.0258.
Against the Japanese currency, however, the dollar USDJPY +0.32% rose to 78.89 yen, from ¥78.71 in U.S. trading late on Monday.
From a technical perspective, a close above the top of a “cloud” on the charts at ¥79.01 would mark a “very significant” event for dollar/yen, wrote William Moore, technical strategist at Royal Bank of Scotland, in a note.
“The last proper cloud break resulted in a run up to above ¥84 the figure,” Moore said. “Note, too, that in the short term the market has broken through trendline of resistance formed from some of the previously monthly highs,” while notable resistance levels are seen at ¥79.48 and ¥80.30.
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