• Concerns over Italy’s debt situation keep a lid on any the early uptick to 1.1225 area.
• A modest bounce in the US bond yields underpin the USD and add to the selling bias.
The EUR/USD pair struggled to capitalize on its early uptick and momentarily slipped below the 1.1200 handle in the last hour to refresh session lows.
The optimism over US car tariff delay turned out to be short-lived and the pair failed to build on the overnight goodish bounce, rather now seemed to be facing some stiff resistance near the 1.1225 region amid concerns over Italy’s debt situation.
It is worth reporting that Italy’s Deputy Prime Minister Matteo Salvini had said that the government is ready to break the EU’s ceiling of 3% debt-to-GDP ratio, which triggered a sharp decline in Italian bond yields and have been affecting negatively on the common currency.
As Yohay Elam, FXStreet’s own Analyst explains: “The common currency is also suffering from its issues. Italian interior minister Matteo Salvini, which is the de-facto PM, refused to raise the VAT, a measure agreed with the European Commission.”
He further added, “investors are selling off Italian bonds and running to the safety of German ones. The spread between the yields has reached its highest in three months, and the negative German 10-year yield is also wreaking havoc on the euro.”
Meanwhile, a sudden change in the risk sentiment helped the US Treasury bond yields to witness a sharp intraday bounce, which eventually provided a minor lift to the US Dollar and further collaborated to the pair’s latest leg of the slide over the past few hours.
Moving ahead, Thursday US economic docket features some second-tier releases – housing market data, the usual initial weekly jobless claims and Philly Fed Manufacturing Index, which might be looked upon to grab some short-term trading opportunities.
Technical levels to watch