Euro loses ground on dollar

The euro dropped against the dollar today following French President Nicolas Sarkozy’s announcement that a strong euro impacted exporters, reports Reuters.

The single currency looked set to remain pressured with investors still cautious about Spain’s fiscal problems and eurozone debt contagion as a whole. Traders cited Swiss investors selling after Sarkozy claimed the exchange rate of the euro should be talked about with the European Central Bank.

The euro moved downwards throughout the European session, with $1.3076 being its session low. The move wiped out modest gains made on Tuesday after decent demand at the Spanish bill auction, upbeat earnings from US firms and a better-than-anticipated German ZEW sentiment survey.

Major market players claimed that the single currency could post additional losses ahead of Thursday’s Spanish bond auction, and that high yields and poor demand at the auction may aggravate concerns about the country’s fragile fiscal position.

There was little currency market reaction to Germany offloading two-year bonds at an all-time low yield. Since January, the euro has traded generally traded between $1.30 and $1.35, and has struggled to go above $1.32 since early this month. In a note, CitiFX Wire said that its traders were looking at purchasing the range-bound currency during dips.