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Forex: EUR/USD bounces back to 1.3200 after lower Spanish yields

The European morning 100-pip fall to as low as 1.3178 was triggered by the release of Markit PMI data, with weakening EMU figures, Germany manufacturing little above the 50.0 threshold and France underperforming Germany. The pair is moving back to the 1.3200 psychological level following the Spanish bond auction.

10-year Letras improved their average yield from 5.290% to 5.202%. 2-year debt also lowered its costs, from 2.823% to 2.540%. Portugal will be publishing its current account balance at 12:00 GMT.

UBS analysts are neutral: “Yesterday's sharp sell-off suggests the risk is for extension of the consolidation phase”, wrote analyst Gareth Berry, pointing to support at 1.3187 ahead of 1.3063. Resistance is at 1.3434.

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