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EUR/USD Loses Critical Support – Downfall Accelerated

Euro/dollar finally lost the critical support line and its losses are accelerating quite rapidly. The move that began with the margin raise for Italian bonds and turned into a full scale sell off of Italian bonds is now taking a bigger toll on EUR/USD.

The pair breached support at 1.3650 and is now at 1.3625, falling quickly after this line is lost. Further support is at 1.36, but this is minor.

More significant support is at 1.3550, but only 1.3450 is stronger. If this avalanche continues, more support is at 1.3360, and of course, the trough of 1.3145 awaits the pair.

For more on the pair, see the euro/dollar forecast.

Italian 10 year bond yields are already at 7.42%. 2 year yields are at 7.15% at the time of writing.

The support line of 1.3650 held on quite well for some time, but this was eventually breached. The only factor that can stop this is the ECB: it can step up bond buying of Italian bonds. The new Italian president of the ECB, Mario Draghi has a hard decision to make.

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.