EUR/USD offered below 1.2100 amid risk-off mood, Italian politics, virus updates in focus

• EUR/USD stays heavy near the lowest in six weeks.
• Italian PM Conte faces a confidence vote in lower house.
• Virus numbers rise in the US, Europe.
• Eurogroup meeting, Italian CPI will decorate the calendar amid US off.

EUR/USD remains depressed around 1.2070, down 0.05% intraday, while heading into the European session open on Monday. The major currency pair earlier dropped to the fresh lows since December 09 as the US dollar began the week on a front-foot. However, the absence of major catalysts due to the off in America and cautious sentiment ahead of the key event in Italy probe the traders by press time.

Italian politics is getting interesting as Prime Minister Giuseppe Conte faces a confidence vote in the lower house on Monday. Although PM Conte is likely to win today, per Bloomberg, Tuesday’s voting in the Senate can turn him down following the recent shock from former ally Matteo Renzi.

“Conte needs about a dozen more votes in the Senate to restore an outright majority in the 321-strong upper chamber after the defection of Renzi’s group,” said Bloomberg.

Elsewhere, rising coronavirus (COVID-19) numbers push Rome towards stricter activity restrictions starting from Monday, per Health Minister Roberto Speranza. As per the latest official record, 16,000 new infections and 477 deaths could be found due to the deadly virus.

On the other hand, the US Centers for Disease Control and Prevention (CDC) reported that the total novel coronavirus cases of 23,653,919 as of yesterday versus 23,440,774 in the previous report on January 16. It should be noted that the vaccine producers are claiming to have the ability to tame the virus strains but can’t tame the market fears.

Other than the virus updates and politics, cautious mood ahead of US President-elect Joe Biden’s first day of duty and initially negative signals for taxpayers and Canadian oil companies weigh on the risks.

Against this backdrop, stock futures in the US and Europe remain offered while Asia-Pacific shares stay downbeat. Further, the US dollar index (DXY) rises to a fresh high since December 21 by the time of the press.

Looking forward, Italy’s December month Consumer Price Index (CPI), expected to remain unchanged at -0.1% YoY, will join the political play in Rome and the Eurogroup meeting to entertain EUR/USD traders. Although news from Itay may keep sellers hopeful, chatters between the ECB President Christine Lagarde and fellow bloc members can help Euro to lick its wounds. It’s worth mentioning that the off in America, due to Martin Luther King’s Birthday, will restrict the pair’s moves.

Technical analysis

While stretching Friday’s downside break of 50-day SMA, EUR/USD bears attack 38.2% Fibonacci retracement of an upside from November 2020 to the monthly high, near 1.2070-65. It should, however, be noted that December 02 low near 1.2040 and the 1.2000 threshold will be tough nuts to crack for the sellers. Meanwhile, an upside clearance of 50-day SMA, at 1.2091 now, will have to cross a falling trend line from January 07, currently around 1.2105, to confirm corrective pullback towards the multiple lows marked since late-December around 1.2130.