“¢ A subdued USD price action helps stage a modest rebound after the overnight slump.
“¢ Italian budgetary concerns might continue to keep a lid on any runaway rally.
The EUR/USD pair quickly reversed an early European session dip back closer to YTD lows and is currently placed at fresh session tops, just above mid-1.1200s.
After yesterday’s bearish break through the 1.1300 handle and a subsequent fall to the lowest level since late June 2017, the pair staged a modest recovery and was supported by a subdued US Dollar price action.
The recent USD upsurge to roughly 1-1/2 year tops, triggered by expectations for a gradual Fed monetary policy tightening, took a brief pause on Tuesday and was seen as one of the key factors extending some support to the major.
The uptick, however, seemed lacking strong conviction/strong follow-through amid Italian budgetary concerns, especially after country’s Economy Minister Giovanni Tria said that growth forecast contained in Italian budget is ‘non-negotiable’.
It is worth reporting that Italy is required to resubmit its draft budget proposal by today and expectations of a largely unchanged budget might keep a lid on any runaway rally, rather trigger a fresh leg of a downside for the common currency.
Technical levels to watch
Any subsequent up-move beyond the 1.2970-75 immediate resistance might confront some aggressive supply near the 1.1300 handle (support turned resistance) and seems more likely to remain capped the 1.1325-30 horizontal zone.
On the flip side, the 1.1235-30 region now seems to protect the immediate downside, which is closely followed YTD lows, around the 1.1215 area, and the 1.1200 round figure mark, which if broken should pave the way for an extension of the bearish trajectory.
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