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  • The pair fades the bull run to the 1.18 handle earlier in the session.
  • The greenback found support in the mid-93.00s so far.
  • Markets focused on Italy, US-China trade talks, risk trends.

After a bullish attempt to the 1.1800 region lacked of follow through, EUR/USD has now returned to the 1.1770/80 band where some support appears to have emerged.

EUR/USD looks to Italy, risk trends

After bottoming out near the 1.1700 handle on Monday – or fresh cycle lows – spot managed to regain some attention and closed the first day in the positive territory after five consecutive pullbacks.

Some profit taking around the greenback after the US Dollar clinched fresh YTD tops beyond 94.00 the figure yesterday allowed the pair to reclaim some ground lost.

In the meantime, EUR appears fragile as the formation of a populist government in Italy prompted some concerns to emerge, particularly on the fiscal front. The new government is expected to face a vote of confidence next week while the new cabinet should be ready in the next hours.

Furthermore, large long positions held by the speculative community keep EUR vulnerable to further declines, leaving the door open for a potential re-test of yesterday’s lows.

Nothing expected data wise today, while the focus of attention remains on the FOMC minutes tomorrow and the ECB minutes on Thursday.

EUR/USD levels to watch

At the moment, the pair is losing 0.09% at 1.1780 and a breakdown of 1.1717 (2018 low May 21) would target 1.1700 (psychological level) en route to 1.1553 (monthly low Nov. 7 2017). On the flip side, the next resistance aligns at 1.1842 (10-day sma) seconded by 1.1943 (21-day sma) and finally 1.1996 (high May 14).