EURUSD: Euro Below 1.16 Amid Italian Fears

29 / 05 / 2018
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The single currency continues to be under pressure and the EURUSD pair dropped on Tuesday as well, falling below the 1.16 level, which represents 6 month lows for the pair. It was trading 0.50% lower during the London session, hovering around 1.1570.

The Italian 1-year bond yields rose to 1% and the 10-year bond skyrocketed toward 3% as political uncertainty in Italy and Spain remained elevated in Europe. Italian yields are now at 4-6 year highs and the situation could still get worse. The single currency tends to suffer when yields on peripheral bonds are rising.

The economic calendar offers only the US consumer confidence gauge for May, which is projected to marginally decrease, but the Italian worries will dominate today’s price action on the markets.

Traders are selling the euro and it wasn’t this oversold since March 2015, according to the RSI indicator with the 21 period. The price then dropped to 1.05, but managed to jump quickly back to the 1.10 level.

The euro is now testing the very strong and last support of October 2017 lows around 1.1560 and if the price cracks lower, further decline toward 1.15 could occur very quickly.

On the other hand, rallies should be sold and the first intraday selling zone is seen at 1.16, the next one is at 1.1640. In all cases we strongly recommend to have rigorous money and risk management.

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