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  • Italian budget concerns continue to weigh on the Euro as bond yield spreads steadily widen.
  • The Euro sees a thin calendar for Tuesday, lending extra weight to political headlines for the day.

The EUR/USD is trading flat and steady in early Tuesday action just shy of the 1.15 handle as the pair holds close to near-term lows.

The Euro drifted into an early low for the week on Monday with US markets off for the long weekend, and the EUR/USD heads into Tuesday’s markets with a thin calendar on the docket, though US exchanges will be back online for the week, bringing a much-needed injection of market volumes.

Europe has a thin day on the data docket for Tuesday, and market action will be going to the US session, where American PPI figures will be dropping at 12:30 GMT, and  forecast to tick up slightly from 2.3% to 2.4%.

Italy headlines remain a drag on the EUR, with Italian bonds continuing to underperform against their major benchmark peers as political confidence crumbles, and the downside pull of the Italian government’s budget concerns is poorly timed, with broader markets already suffering a lack of confidence at the hands of rising US Treasury bond yields and increasing discomfort surrounding global trade, and this week could see the EUR/USD take a further haircut.

EUR/USD levels to watch

The major Euro pairing looks set for an extended slide according to the charts, and according to FXStreet’s own Valeria Bednarik: “the dollar seems poised to extend its advance, as, once the market returns in full fashion, there are good chances that US Treasury yields will skyrocket. The EUR/USD pair 4 hours chart shows that the pair failed to sustain modest gains above a firmly bearish 20 SMA, now offering a dynamic intraday resistance at around 1.1500, as the Momentum maintains its bearish slope below its 100 level, but the RSI indicator stabilized right above oversold readings, amid the limited volume and the lack of follow-through. The 1.1460 price zone is a strong long-term static support, as the pair topped around it multiple times between 2015 and 2017, and won’t be easy to break, but if it blows away, the pair has room to extend its slump down to 1.1250.”

Support levels: 1.1460 1.1420 1.1475

Resistance levels: 1.1500 1.1530 1.1565