Prior to the release of the results from the Spanish bond auction, the euro had slid lower on concerns about the implementation of the EU Summit decision as some euro region members opposed the decision. The EUR/USD pair was trading at 1.2522 before the results and dropped to 1.2514 after the release of the results. The 17-nation currency also dropped 0.4 percent against the yen to exchange at 99.71 percent. The euro had increased to the highest when the EU Leaders’ Summit gave its decision on Friday June 29 which also resulted to the Spanish 10-year yield to drop. However, concerns about implementation of the decision and the unfavorable economic data from the region have led to the weakening of the euro.
The euro is trading low against the yen and the dollar prior to the anticipated rate cut by the ECB later today. According to Neville Hill, the temptation to act is great due to the continued decline in the region’s economy. In addition to rate cut, the European Central Bank is taking other measures to spur growth in the region. Some of these measures include the establishment of a program to spur credit companies, households, and activating sterling liquidity facility for financial institutions in the region.