The Euro bounces off the 1.1305 support level as Bloomberg reported the possibility of the Italian government revising their controversial budget plan in order to cater demands from the EU. The Bloomberg report suggested that the Italian government is willing to propose a 2% budget deficit, down from the previous proposal of 2.4%. Such behavior is clearly positive for the Single currency as some of the political uncertainty within the bloc is removed. For today, traders need to keep a look on any news coming out of the EU summit, with Italy’s budget plan being the key subject to monitor. Note that during this summit, there is a high possibility that EU leaders will give their clear opinions on the proposed 2% budget deficit for Italy.
The Single currency bounces off the 1.1305 support and breaks above the 13 and 50-period moving averages. The break above these two moving averages signals strong bullish momentum. If the bullish momentum continues and prices break above the 200-period moving average (purple) then this might signal a shift in the general directional bias of the pair. After the break above the 200-period moving average, the next key resistance level to monitor will be the 1.1426 level. If bullish momentum wears out and prices break below the 13 and 50-period moving averages then prices will fall and retest the 1.1305 support.
Support: 1.1351 / 1.1305
Resistance: 1.1392 / 1.1426