EUR/USD closed below 76.4% Fib despite oversold conditions, focus on Italy


  • EUR/USD closed below 1.1790 - 38.2 percent Fibonacci retracement of Nov-Feb rally.
  • The relative strength index (RSI) continues to show oversold conditions.
  • Focus on Italy-German bond yield spread.

The EUR/USD closed below 1.1790 - 38.2 percent Fibonacci retracement on Friday and dipped to a fresh four-month low of 1.1744, despite the oversold conditions as shown by the RSI.

Further, the US 10-year treasury yield created a bearish outside-day candle, signaling the rallies in the yields and greenback may be due for a correction.

Still, the EUR/USD is showing no signs of life, possibly due to Italian political uncertainty and the resulting rise in the Italian-German yield differential. The 10-year Italy-German bond yield spread rose to four-month highs and the 10-year Italian yield jumped to a three-month high of 2.14 percent last week.

Italy's President is expected to confirm a coalition between the League and the Five-Star Movement (M5S) today. So, Italy is all set to have the most eurosceptic government in the region, so further widening of the Italian-German yield spread could widen further.

However, if the political uncertainty subsides, then EUR/USD may witness a corrective rally.

EUR/USD Technical Levels

A break below 1.1718 (Dec. 12 low) would expose support lined up at 1.1669 (Oct. 6 low) and 1.1662 (Aug. 17 low). On the higher side, resistance is seen at 1.1790 (76.4 percent Fibonacci retracement), 1.1822 (May 9 low) and 1.1845 (descending 10-day moving average).

  TREND INDEX OB/OS INDEX VOLATILY INDEX
15M Bearish Neutral Low
1H Bullish Neutral Low
4H Bearish Oversold Shrinking
1D Bearish Oversold Shrinking
1W Bearish Oversold Shrinking

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD climbs above 1.1250 as investors eye coronavirus headlines

EUR/USD preserved its recovery momentum early Friday and rose above 1.1250 during the European trading hours. Markets are doubting the Fed's policy tightening prospects as the new coronavirus variant revives concerns over the economic recovery losing steam.

EUR/USD News

GBP/USD rebounds toward mid-1.3300s on broad dollar weakness

GBP/USD reversed its direction after dipping below 1.3300 earlier in the day and started to push higher toward 1.3350. The greenback is facing heavy selling pressure amid the sharp decline witnessed in the 10-year US Treasury bond yield.

GBP/USD News

Gold clings to strong gains above $1,800 as US T-bond yields plunge Premium

Gold staged a decisive rebound on Friday and reclaimed $1,800. The intense flight to safety is causing US Treasury bond yields to fall sharply and fueling XAU/USD's rally. Investors await news on vaccines' effectiveness against the new COVID variant.

Gold News

Cardano could tank to $1 if ADA fails to defend crucial support

Cardano price is currently hovering below a freshly shattered 6-hour demand zone, ranging from $1.68 to $1.79. This resulting crash could extend to the immediate and critical foothold at $1.40. 

Read more

Black Friday 2021 Discounts!

Do you want to take your trading skills to the next level? Now you have a chance of leaping forward at attractive introductory rates. For Black Friday, FXStreet is offering discounts of up to 50% on its upgraded Premium plans. 

Subscribe now!

Forex MAJORS

Cryptocurrencies

Signatures