The Euro continues its weak start to the week after dropping towards 1.1550. This weakness is attributed to the strengthening U.S Dollar and the uncertainty surrounding Italy's debt servicing abilities. The U.S Dollar pressures the Common currency lower as investors favor the safe haven Dollar over the high beta Euro due to the global uncertainty in financial markets. From the Italian side, the government announced a budget plan that will push the country's budget deficit towards 2.4% increasing the risk of Italian assets and thus risking a downgrade in the country's sovereign rating. Keep in mind that a decrease in sovereign rating will deteriorate sentiment surrounding Italian assets and decrease their respective demand.
The Euro pushes below the 1.16127 mark and drops towards the next support level at 1.15428. Momentum remains bearish and bears are projected to increase their short positions when the 50-period moving average (yellow) crosses below the 200-period moving average (purple). A break below 1.15079 will expose the next support level at 1.14468.
Support: 1.15079 1.14468
Resistance: 1.15428 1.16137