In light of the recent news regarding the resignation of Italian PM. Mario Monti, Currency Analyst Lee Hardman at BTMU comments “A period of heightened political uncertainty is an unwelcome development should it place renewed upward pressure on yields, tightening overall monetary conditions in Italy undermining growth. However, an earlier than expected election appears unlikely to materially derail the economic reform and fiscal consolidation agenda which was serving to restore investor confidence in Italy with the 2013 budget set to receive final approval shortly”.
The cross is now gaining 0.15% at 1.2909.
Next resistance levels line up at 1.2935 (23.6% of 1.3127-1.2876) followed by 1.2972 (38.2% of 1.3127-1.2876) and finally 1.2974 (high Dec.7).
On the flip side, a breach of 1.2880 (low Dec.10) would open the door to 1.2876 (low Dec.7) and 1.2839 (61.8% of 1.2661-1.3127).