“¢ Italy’s budgetary concerns continue to weigh on the common currency.
“¢ Resurgent USD demand further aggravates the selling pressure.
“¢ Technical selling below 1.1530-25 support adds to the weakness.
The EUR/USD pair remained under some intense selling pressure on Tuesday and dropped to near six-week lows in the last hour.
The pair extended last week’s steep decline from levels beyond the 1.1800 handle, with a combination of negative factors exerting downward pressure for the fifth consecutive session.
The shared currency continues to be weighed down by concerns over Italy’s budget plans, which aggravated further after Italy Deputy PM Di Maio said that the government will not change 2019 2.4% deficit target.
Adding to this, resurgent USD demand, with the key US Dollar Index building on its momentum further beyond the key 95.00 psychological mark, exerted some additional downward pressure on the major.
Meanwhile, comments by Italian lower house budget committee head Claudio Borghi, saying that the idea of leaving the Euro is ‘out of the window’, did little to ease the bearish pressure and stall the ongoing slide to the lowest level since August 21.
The latest leg of a sudden fall over the past hour or so could further be attributed to some fresh technical selling below the 1.1530-25 important horizontal support. Hence, a follow-through weakness, amid absent market moving economic releases, now looks a distinct possibility.
Technical levels to watch
The downward momentum seems strong enough to continue dragging the pair further below the 1.1500 handle towards testing its next support near the 1.1440-35 region. On the flip side, any meaningful recovery attempt now seems to confront fresh supply near mid-1.1500s, above which a bout of short-covering could assist the pair towards reclaiming the 1.1600 handle.
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