Forex – EUR/USD spikes lower on Greek vote uncertainty

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EUR/USD hit 1.2766 during U.S. afternoon trade spiking lower 0.37%

The euro spiked lower against the U.S. dollar  Wednesday, amid fresh concerns over the economic outlook for the euro zone, while uncertainty over a Greek parliamentary vote on austerity pressured the single currency

The pair was likely to find support at 1.2625, the low of September 7 and resistance at 1.2825, Tuesday’s high.

The European Commission slashed its forecast for growth in the euro zone earlier, saying it now expects gross domestic product to contract by 0.4% this year, expand by just 0.1% in 2013 before growing 1.4% in 2014.

The report came after official data showed that German industrial production dropped 1.8% in September, compared to expectations for a 0.5% decline, adding to concerns that the bloc’s economy is weakening.

Elsewhere, official data showed that industrial production in Spain tumbled 7% in September, almost double the decline expected by economists.

Another report showed that retail sales on the euro zone fell by 0.2% in September, compared to expectations for a 0.1% decline.

The euro also came under broad selling pressure ahead of a Greek parliamentary vote later in the day, on an austerity bill necessary for Athens to secure its next installment of bailout funds.

The shared currency advanced to session highs against the dollar earlier in the session, as President Barack Obama’s re-election for a second term was seen as boosting the chances that the Federal Reserve’s policy of quantitative easing will remain in place.

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