EUR/USD analysis: political jitters undermine the common currency
EUR/USD Current price: 1.1649
- Looming elections in Italy and Spain sent the EUR/USD to a fresh 2018 low.
- Minor data scheduled for Tuesday, more relevant one coming next Wednesday.
In the absence of other news, political woes in Europe led the way this Monday, spurring risk aversion and leading to USD gains against the common currency, despite the better market mood seen at the weekly opening. News that US President Trump is willing to resume talks with North Korean leader to finally meet next June, backed high-yielding assets in detriment of those considered safe-havens, but that lasted just until the European morning when headlines from Italy and Spain triggered a run back to safety. The possibility of anticipated elections in Spain and Italy hurt an already weakened EUR, as Spanish PM Mariano Rajoy faces election calls on the back of a corruption scandal involving his party. In Italy, President Mattarella rejected as economy minister the Eurosceptic candidate Paolo Savona, triggering an "institutional crisis" in the words of Luigi Di Maio from Five Star Movement. The coalition government was put on hold, and Mattarella called Carlo Cottarelli, a former IFM member, to form a caretaker government ahead of new elections.
The UK and the US were on holidays leaving the macroeconomic calendar empty. The week, however, will provide multiple macroeconomic clues, starting next Wednesday with Inflation in Germany and the US ADP report and the Q1 GDP revision among others.
Technically, the EUR/USD pair extended its yearly decline to 1.1607 before bouncing some, but settled below Friday's low, maintaining the dominant negative stance. The 4 hours chart shows that a bearish 20 SMA capped the upside now around 1.1685 while technical indicators pared their declines, but hold well below their mid-lines. A break below the daily low opens doors for additional declines toward the 1.1550 region, where the pair bottomed last December, while below this last, 1.1440 is the next relevant mid-term resistance.
Support levels: 1.1605 1.1580 1.1550
Resistance levels: 1.1645 1.1685 1.1720
Author
Valeria Bednarik
FXStreet
Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.
