Euro slips in New York

The euro dropped from a two-week high against the dollar and a nearly five-month peak versus the yen on Wednesday, hurt by widening interest rate differentials between safe-haven German debt and peripheral bonds, suggesting renewed euro zone worries.
Italian and Spanish debt prices took a beating on concerns about Spain's slow progress in boosting its finances. The wave of Spanish and Italian bond selling benefited German Bunds, whose yields slipped back below 2 percent for the first time this week. Yields on Spain's 10-year bonds rose to a one-month high of 5.40 percent. Benchmark Italian yields climbed to 5.0 percent, a one-week peak, which reflected some anxiety and undermined the euro.
"Even though US yields fell today, Bund yields fell further, so the dollar is getting a bit of traction against the euro on the yield story," said Richard Franulovich, senior currency strategist, at Westpac in New York. In late afternoon trading, the euro was down 0.1 percent at $1.32100.
Talk of Germany cutting back spending "added to further pressure on the euro because of the risk it poses to euro zone growth," said Kathy Lien, director of FX research at GFT In Jersey City, New Jersey. Investors will now look to manufacturing data in Europe to be released on Thursday. They remain wary of another flare-up in the euro-zone debt crisis, with the Italian government set to clash with unions over employment law reforms.
Earlier, the euro had touched an almost two-week high of $1.32860 after Greece's lawmakers approved the country's second bailout deal, as expected. Analysts said the approval had been seen as a formality, but signs the Greek bailout was on track boosted the euro zone's common currency in early global trading. "The lack of follow-through on the upside in the euro precipitated a technical run through $1.3200, which then led to the execution of stop-loss orders below $1.3200," said Joseph Trevisani, chief market strategist at World-wide Markets in Woodcliff Lake, New Jersey.
Technical analysts were earlier forecasting the euro rally was likely to run out of steam around $1.33, just above the 61.8 percent retracement of its late February to mid-March fall. The euro also fell against both the Swiss franc and sterling. The euro was last at 1.20570 francs, little changed on the day, and at 83.26 pence, down 0.1 percent.
The dollar, meanwhile, surrendered gains against the yen after data showed US home resales unexpectedly fell in February and the supply of properties on the market rose, underscoring the many hurdles for a housing market recovery. The greenback rose as high 84.100 yen, just shy of a recent 11-month high. It last traded at 83.367, down 0.5 percent, but was up 8.3 percent so far this year. The euro fell from a near five-month peak of 111.430 yen, after nearing resistance around the peak hit on October 31, when Japanese authorities last intervened in the market. It was last at 110.120, down 0.5 percent. The Australian dollar fell 0.3 percent to US $1.0452 after earlier falling to a two-month low of US $1.0417, just above the 200-day simple moving average of US $1.0400. The 200-day exponential moving average lies at US $1.0375.