• Reports that Savona will lead Italian economy ministry prompts some aggressive selling.
• Downside remains limited amid a follow-through USD slide and oversold conditions.
The EUR/USD pair faded an early European session bullish spike and quickly retreated around 50-pips from to an intraday high level of 1.1830.
The pair initially was seen building on its overnight recovery move from 6-month lows and benefitted from the ongoing US Dollar profit-taking slide. The up-move, however, ran out of steam, with continued political uncertainty in Italy capping additional gains.
The latest leg of sharp fall over the past hour or so could be news reports that Paolo Savona, an 81-year-old economist and former minister with Euro-skeptic views, will be designated the Minister of the Economy and Finance.
The downfall, so far, has been limited and the pair has managed to hold its neck above an intraday low level of 1.1756, touched earlier during the Asian session. Moreover, near-term oversold conditions also seemed to hold traders back from placing aggressive bets ahead of Wednesday's important releases, including the flash version of Euro-zone PMI prints and the latest FOMC meeting minutes.
Technical levels to watch
Bulls might try and defend immediate support near mid-1.1700s, below which the pair is likely to slide back towards retesting the 1.1710-1.1700 important support. On the upside, any meaningful up-move back above the 1.1800 handle is likely to confront strong resistance near the 1.1840-50 supply zone, which if cleared could assist the pair to dart back towards reclaiming the 1.1900 round figure mark.
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