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  • The pair sinks further and tests fresh daily lows near 1.1630.
  • The greenback manages to retake the 95.00 handle.
  • Italian budget headlines keep weighing on spot.

The selling bias around the European currency is now picking up pace and is dragging EUR/USD to fresh lows in the 1.1630 region.

EUR/USD looks to EMU data, Italy

The pair remains vigilant on the developments in the Italian political arena and the bonds market, where the announcement of the 2.4% budget deficit seems to have disappointed expectations among traders. This figure represents the upper end of the 2.0%-2.4% initial target.

In addition, the greenback continues its march north as investors continue to price in a fourth rate hike by the Federal Reserve (likely in December), particularly after Wednesday’s FOMC meeting and auspicious results in the US docket.

Later in the day, advanced CPIs in France, Spain and Italy are due seconded by German labour market figures and the more relevant flash inflation figures in the euro area.

Across the pond, inflation tracked by the Core PCE will be the salient event seconded by Personal Income/Spending and the final print of the U-Mich index.

EUR/USD levels to watch

At the moment, the pair is losing 0.13% at 1.1626 and a breakdown of 1.1618 (55-day SMA) would target 1.1526 (low Sep. 10) en route to 1.1508 (low May 29). On the flip side, the next up barrier aligns at 1.1815 (high Sep.24) seconded by 1.1853 (monthly high Jun.14) and finally 1.1944 (200-day SMA).