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Euro Declines Against Most Majors

05:31, 30th July 2012

(RTTNews) - The euro slipped against most major currencies in early European deals on Monday after a report showed that the Spanish economy contracted further in the second quarter.

The gross domestic product fell 0.4 percent in the second quarter of 2012 after a 0.3 percent decline each in the first quarter of 2012 and in the fourth quarter of 2011. The outcome was in line with the Bank of Spain's estimates released early last week.

Annually, GDP shrank 1 percent following a 0.4 percent decline in the first quarter. This also matched the central bank's forecast.

Adding to euro's slide, survey data from the European Commission showed that the Eurozone economic sentiment deteriorated in July due to lower confidence in all sectors.

The economic sentiment index came in at 87.9, down from 89.9 a month ago. The reading was also below expectations of 88.9.

The euro strengthened on Friday on renewed optimism about the eurozone after the leaders of Germany and France on Friday joined the European Central Bank in vowing to protect the currency.

ECB chief Mario Draghi's comments Thursday that the central bank was "ready to do whatever it takes to preserve the euro" cheered investors.

Draghi's comments were also reinforced by German Chancellor Angela Merkel and Italian prime minister Mario Monti who vowed in a joint statement on Sunday to do "everything to protect the eurozone".

The euro that ended Friday's trading at 1.2303 against the US dollar fell to 1.2257. The next downside target level for the euro-dollar pair is seen at 1.220.

Against the yen, the euro slipped to 95.79 from Friday's close of 96.53. On the downside, 95.5 is seen as the next target level for the European currency.

The euro declined to a 2-day low of 1.2317 against the Canadian dollar and if the euro weakens further, it will break the 1.230 level. At Friday's close, the euro-loonie pair was quoted at 1.2357.

The euro plunged to a 1-week low of 1.1718 against the Australian dollar, compared to last week's close of 1.1742. The next downside target level for the euro-aussie pair is seen at 1.170.

Elsewhere, the euro traded quietly against the pound and franc and now trading at 0.7817 and 1.2013, respectively.

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