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Euro remains unfazed by Italian political risk so far today

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EUR/USD rises back above the 1.1200 handle as buyers look to seize near-term control on the day


Traders are closing one eye in dealing with Italian election risks so far today as the euro inches higher against the dollar, in part also helped by flows from EUR/GBP after the pair gained on the back of weaker UK data earlier.
EUR/USD now moves back up above the 100-hour MA (red line) as buyers look to regain near-term control. However, the key test to any further upside momentum remains the 100-day moving average @ 1.1226.
Buyers need to hold a break above that in order to gather more conviction for a move higher. Otherwise, we’re basically still in the same plight throughout the whole of this week.
As for Italian risks, it’s something that doesn’t matter until it matters. It’s a tough one to explain but it’s more of the fact that it is a factor that could affect the currency but only when traders decide to focus on it.
However, the fact that it is there means that there is a possibility it could weigh on the euro over the coming weeks. And that is something that traders should be aware of.
For today, Italian assets are taking a beating with 10-year bond yields up by ~23 bps and the main stock market index down by more than 2% on the day:

It’ll be hard to imagine that the euro can ignore the above market movements if they are to continue for a prolonged period of time.

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