EUR/USD looks for direction around 1.1630, eyes on Italy

The pair remains sidelined around the 1.1630 region on Tuesday.
The greenback trades with marginal losses above the 94.00 handle.
Italian politics remain the exclusive driver of the pair so far.

Pablo Piovano FXStreet

Always vigilant on developments from Italy, EUR/USD has managed to rebound from the 1.1600 neighbourhood – or fresh 2018 lows on Monday – and is now attempting to stabilize in the 1.1630 region.

EUR/USD focused on Italy

After failing to extend the bull run beyond the 1.1730 area at the beginning of the week, the pair met a wave of selling pressure stemming from the increasing uncertainty in the Italian political scenario and the widening gap between German and Italian yields.

The decline in EUR gained extra traction after PM G.Conte stepped down amidst calls for President S.Mattarella’s impeachment by leaders of the governing coalition M.Salvini and L. Di Maio. The current effervescence in Italian politics will likely derive in snap elections in September/October.

In the meantime, the greenback climbed to fresh YTD tops around 94.50 yesterday amidst thin trade conditions due to the Memorial Day holiday and declining yields as of late.

In the data space, EMU’s M3 Money Supply and Private Sector Loans are due next along with speeches by ECB’s Y.Mersch and S.Lautenschaelager. Across the pond, the Consumer Confidence gauge by the Conference Board will be the salient release seconded by the S&P/Case-Shiller index.

EUR/USD levels to watch

At the moment, the pair is up 0.09% at 1.1636 and a break below 1.1608 (2018 low May 28) would target 1.1600 (psychological level) en route to1.1553 (monthly low Nov.7). On the other hand, the next hurdle emerges at 1.1728 (10-day sma) seconded by 1.1829 (high May 22) and finally 1.1830 (21-day sma).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

AUD/USD consolidates above 0.7000; remains close to monthly top

AUD/USD holds steady above 0.7000 during the Asian session on Friday, trading just below the previous day's monthly low amid diverging forces. A hawkish RBA continues to support the Aussie, while the recent decline in US bond yields keeps the US Dollar depressed near a three-week low. However, oil-driven inflation fears reinforce Fed hike bets, which, along with geopolitical risks, could benefit the safe-haven buck and cap the currency pair.

USD/JPY bounces off one-month low; climbs to 157.00 amid reviving USD demand

USD/JPY rebounds from the 156.00 neighborhood, or a one-month low touched during Friday’s Asian session, with bulls looking to extend momentum beyond 157.00 amid the emergence of some US Dollar buying. Meanwhile, Japan's National CPI rose to a nine-month peak and reaffirmed BoJ rate-hike bets, which could support the Japanese Yen and cap gains for the currency pair.

Gold treads water around $4,000

Gold prices maintain its offered stance in place at the end of the week, hovering around the key $4,000 threshold per troy ounce. The persistent selling bias in the precious metal comes amid decent gains in the US Dollar and an acceptable rebound in US Treasury yields across the curve, all alongside further upside traction in crude oil prices.

Crypto Today: Bitcoin holds the 50-day EMA as Ethereum and XRP face structural resistance

Bitcoin gradually ticks up on Friday, trading above $81,000. The Crypto King has recently defended structural support near $80,000, reinforcing the prevailing bullish outlook. Ethereum similarly edges higher above $2,400, while Ripple trades above $1.32 after testing support around $1.30.

The French bond panic is overdone. Here's what the market is misreading

France's 10-year government bond yield has climbed above 5%, reigniting fears of a sovereign debt crisis in the Eurozone. With public debt exceeding €3.5 trillion, persistent budget deficits and a fragmented political landscape, investors are increasingly questioning the French government's ability to stabilize its finances.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.