The euro advanced 15 pips (+0.11%) against the US dollar to $1.3169 this morning, following a 0.5% decline yesterday.
The single currency rose following the Dutch, Spanish and Italian government bond auctions. The Netherlands today sold €1.995 billion of two- and 25-year government bonds, roughly in the middle of its target range, a day after Dutch prime minister Mark Rutte resigned in a crisis over budget cuts. The Italian and Spanish government bond auctions were also successful, although yields continued to rise. The average yield on the Spanish three-month bills came in at 0.634%, up from 0.381% at the previous auction on 27 March. The average yield on the six-month bills was 1.58%, up from 0.836% at the March auction.
Although Italy managed to sell its maximum target of €2.5 billion, the yields rose from 2.352% at the previous auction on 27 March to 3.355%. Italy faces a more important test on Friday, when the Treasury will auction up to €6.25 billion in five-, seven- and ten-year bonds.
The US dollar may strengthen ahead of the Fed’s two-day policy meeting, which begins today. Investors will be waiting keenly for the US consumer confidence and housing figures. So far, EUR/USD seemed largely range-bound, with support seen at $1.31 and resistance at $1.32.