The euro slipped against the dollar and the yen on Friday after a newspaper said several Spanish savings banks failed tests to see how they would cope with worsened economic conditions. The euro hit the day's low of $1.2861 on trading platform EBS after Spanish newspaper El Pais reported on Friday that several of the country's 18 savings banks have failed the so-called stress tests.
But losses were limited in the single currency, which jumped more than 1 percent against the greenback on Thursday, as many investors awaited the official test results at about 1600 GMT. The euro has support at about $1.2720, an interim high from July 9 set during its recent rally from a four-year low, and is consolidating at $1.2720-1.3030. A break above that band could see it testing $1.3090-1.3125, chartists say.
But traders said the euro was unlikely to re-test this week's 10-week high of $1.3029 just yet nor fall sharply ahead of the stress test results, which could move other currencies as well. Traders have been betting most of the 91 European banks being examined will pass. Analysts say if there are no ugly surprises, that will be euro supportive, although some are sceptical about the severity of the checks.
For chartists, the $1.3090 target area is a spike higher on May 10, while $1.3125 is the 32.8 percent retracement of the euro's fall from its November high to the four-year low marked in June. The euro was flat at 112.07 yen, having risen about 0.9 percent on Thursday. It fell to the day's low of 111.73 after the Spanish newspaper report.
The dollar edged up 0.2 percent to 87.09 yen, staying above a seven-month trough of 86.27 yen struck on trading platform EBS late last week. The greenback dipped 0.1 percent against the Japanese currency on Thursday.
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