The Single currency held its ground during yesterday’s session, ending the five-day losing streak, on the back of German Chancellor Angela Merkel comments renewing hopes of a soft Brexit. However, the gains could easily be erased if the Italian yields rise due to political uncertainty and the Federal Reserve minutes validate Chairman Powell’s unwillingness to cut rates aggressively. Italy’s government collapsed yesterday as PM Conte quits amid coalition row, pushing the key European nation into a renewed period of crisis and uncertainty. However, the bond market’s response indicates that investors believe the political crisis would be resolved soon potentially paving the way for a new coalition government, which will likely push the Euro to the upside.
The Euro is once again stuck in a consolidation between 1.1110 and 1.1067 as the bulls and the bears attempt to battle their way out of this range. The buyers need to break above 1.1110 to extend their gains towards the 50-day moving average and 1.1160. The sellers, on the other hand, will need to find momentum and break below 1.1067 to push price towards the yearly low 1.1027.
Support: 1.1027 / 1.0950
Resistance: 1.1110 / 1.1160