“¢ Italian government reportedly discussing to lower 2019 budget deficit target.
“¢ Narrowing Italian-German bond yield spread underpinning the shared currency.
“¢ Weaker German Ifo business survey fails to dampen the prevalent positive tone.
The EUR/USD pair built on its goodish intraday rebound and recovered over 50-pips from over one-week lows touched earlier today.
The shared currency picked up the pace at the start of a new trading week and was supported by reports that Italy’s government was looking to discuss a lower 2019 budget deficit target to 2-2.1% of GDP.
Comments by Italy’s Luigi Di Maio and Matteo Salvini further reinforced the news and the latest optimism was evident from narrowing Italian-German bond yields, which fell below 280 basis points – the lowest level since October 8th and provided a minor boost to the common currency.
Meanwhile, the positive tone seemed rather unaffected by a larger than expected fall in German Ifo business climate index, coming in at 102.00 for November, as compared to 102.8 previous and consensus estimates pointing to a reading of 102.3.
Technical levels to watch
Any subsequent up-move might continue to confront some fresh supply near the 1.1425-30 zone, above which the pair is likely to surpass an intermediate hurdle near mid-1.1400 and aim towards testing 100-day SMA, around the 1.1480 region.
On the flip side, the 1.1350 level now seems to protect the immediate downside, which if broken might turn the pair vulnerable to break below the 1.1325 intermediate support and head towards challenging the key 1.1300 strong horizontal level.
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