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EUR/USD rises to session high as Italian assets help boost risk sentiment

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EUR/USD touches a high of 1.1580 on the day


Italian bonds are trading at their highest levels in six weeks and that is helping to underpin bank stocks on the day. The FTSE MIB is trading up almost 2% currently and that is helping to lift regional equities into positive territory on the day too:

Italy’s main stock index is now trading at its highest levels in almost a month and that is helping to see further flows out of the swissie and yen on the day as risk sentiment starts to improve. The former in particular is taking a bit of a blow as the session progresses. The swissie is now the worst performing major currency on the day, down 0.2% against the greenback while EUR/CHF has risen back above 1.1250 currently.
The swissie has been one of the main beneficiaries in the rush to the exit from Italian assets in mid-August but now we’re starting to see some of the flows reverse again after soothing comments from Italy’s economy minister Giovanni Tria since last week.
And with that, the euro may be getting a helping hand in its bid higher today from an old friend as the correlation between BTPs and the single currency starts to show once again:

Either way, currency flows for the day are pretty evident of how the market is playing things out right now with the yen, swissie and dollar all lagging behind. They’re also joined by the loonie but that owes to the fact that NAFTA discussions are still in limbo and Canada had a rather rough jobs report on Friday to boot.
As for EUR/USD, the pair looks to be heading towards a test of the 100-hour MA (red line) @ 1.1597 now. Break back above that and the near-term bearish bias will be relinquished. Offers are also seen at 1.1600. Further resistance is then seen at the 200-hour MA (blue line) @ 1.1622. Move above that and then the near-term bias turns more bullish.

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