By Sara Sjolin, MarketWatch
LONDON (MarketWatch) — The euro recovered from an almost two-year low on Thursday, pushing the dollar lower, as pressure eased on Spain and investors moved back into riskier assets.
The ICE dollar index DXY -0.25% , which tracks the greenback’s performance against a basket of six major currencies, pulled back 0.2%, or 16 points, to 82.849 from 83.053 late Wednesday.
The euro EURUSD +0.2805% climbed 0.3% against the dollar to again change hands above $1.24 at $1.2403.
The shared European currency dropped as low as $1.2360 in the prior trading day, as surging Spanish bond yields boosted euro-zone concerns.
Simon Smith, chief economist at FxPro, said in emailed comments that it’s natural to see “some area-covering short positions after such extensive losses on the euro.”
“This is combined with the fact that today is month-end and this has provided some fairly erratic and dramatic moves in currencies and other asset classes so far this year, as investors adjust positions, liquidate assets and rebalance to benchmarks,” he said.
Illustrating a better mood in Europe, yields on 10-year Spanish government bonds ES:10YR_ESP -3.12% fell 16.1 basis points to 6.537%, after climbing closer to the keenly-watched 7% level on Wednesday.
“Some are taking comfort in more positive noises regarding the possibility of using the ESM [the European Stability Mechanism] to recapitalize banks and you can see the impact of that on Spanish yields,” Smith said.
The Stoxx Europe 600 index XX:SXXP +0.30% traded 0.5% higher at 421.64. European stocks rebound
Among other major currency pairs, the British pound GBPUSD +0.19% strengthened 0.2% to $1.5497 from $1.5640.
Against the Japanese yen, the dollar USDJPY -0.39% slipped 0.3% to ¥78.80 from ¥79.09.
Sara Sjolin is a MarketWatch reporter, based in London.
