The Euro remains lower as internal EU politics continue to take a toll on the currency. The pessimism around the Euro is mainly due to the uncertainty surrounding the Brexit negotiations and the continuous disagreements regarding Italy’s budget plan for 2019. With Brexit, the Irish backstop issue remains center stage in the negotiations and it does not seem like a deal will be struck if this issue is not dealt with. With Italy’s budget plan, the EU made an unprecedented move by rejecting the proposed government spending plan by Italy. The EU simply feels like the budget plan is too risky for Italy’s economy given that the plan will lead to a budget deficit at 2.4% of GDP. Until any positive developments occur relating to the above topics, the Euro will continue to edge lower.
The Euro continues to trade around the 1.1435 support level with bearish momentum still in place given that prices are trading below all three major moving averages. A break below the 1.1416 mark will confirm the continuation in the weekly drop of the Euro and drive the currency down towards 1.1350. The level at which prices are trading at now is significant given that this level was previously tested three times. Hence, a break below this level will confirm that bears have taken control and the weekly bias of the pair will be bearish.
Support: 1.1435 1.1350
Resistance: 1.1517 1.1553