EUR/USD consolidates above 1.16, awaits fresh leads
|- EUR/USD is trading in a sideways manner above 1.16, is looking to re-enter pennant pattern.
- Light economic calendar and the calm in the Italian bond markets is helping the EUR hold above 1.16.
The EUR/USD is holding above 1.16, despite having faced rejection at the pennant hurdle (lower end now acting as resistance) on Wednesday.
At press time, the pair is trading at 1.1615 and the lower end of the pennant is located at 1.1626.
The pennant breakdown and the sharp rise in the spread between the 10-year Italian bond yield and the 10-year German bund yield witnessed last week had put the bears in a commanding position.
However, the common currency has defied gravity this week, possibly due to the calm in the bond markets. For instance, the Italy-German yield spread now stands at 247 basis points vs Friday's high of 253 basis points.
As for today, the currency pair could continue to trade above 1.16 on lack of first tier data releases in the Eurozone and US. The absence of fresh news on Italy could keep the bond markets calm and the EUR better bid above 1.16.
If the Italy-German yield spread spikes, then the EUR will likely fall back below 1.16.
EUR/USD Technical Levels
Resistance: 1.1626 (pennant resistance), 1.1667 (50-day MA), 1.1747 (July 31 high)
Support: 1.1601 (session low), 1.1573 (previous day's low), 1.1530 (last week's low)
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