EU carbon fell 10 cents on Thursday as a late slide pushed prices within touching distance of its €7.64 technical support, the level it breached earlier in the week on its way to a five-month high.

The benchmark Dec-15 contract settled at €7.67 on ICE Futures Europe, near the bottom of the day’s €7.66-7.78 range, after slumping in the final hour of the session.

Volume was moderate at 9.6 million units on the front-year futures.

The euro fell to a seven-week low against the dollar as the ECB agreed to continue its economic stimulus programme and more funding for Greek banks.

A weaker euro is normally a bearish signal for carbon as it cuts the profitability of big utilities importing dollar-denominated coal, damping their incentive to sell power forwards and buy carbon.

Key coal and German power prices were little changed.

The Dec-15 EUAs are now down nearly 20 cents from their five-month peak of €7.85 on Wednesday, as the speculators that pushed prices to those levels took profits.

The EU’s sale of 2.9 million spot EUAs earlier on Thursday cleared 2 cents below market at €7.69 in a sale that was 3.5 times oversubscribed, the highest bid-to-cover ratio for two weeks.

July is the busiest month for auctions sales this year, with auction supply of 38.9 million, but sales volume halves in August to adjust for lower summer demand.

Meanwhile, major European shares indices climbed 1.5-1.8% to six-week highs after the Greek parliament passed severe reforms overnight and the ECB agreed more funding for the country’s banks, easing investor fears that the debt-ridden country will leave the euro zone.

By Ben Garside – ben@carbon-pulse.com