The Euro’s upside potential could be capped around 1.1250 on Italian political uncertainty. The leader of Italy's ruling League party and Deputy Prime Minister Matteo Salvini pulled the plug on government and said the only way forward was to hold fresh elections. Salvini’s move reportedly provoked Prime Minister Giuseppe Conte to trigger a process that could lead to elections as early as October. The escalated political uncertainty could lead to a sharp widening of the Italy-German yield spread, which is not a good news to the Single currency. Today, the German Trade Balance could spark a short-term volatility on the pair, if the results were worse than expectations it could influence the market sentiment and push the common currency lower. Later in the day, if the US PPI data beats the forecast, it could be the cherry on the top, which will push the spot in the bear’s territory, below 1.1167.
The Single currency bulls were rejected for the third consecutive day at the 200-day moving average, around 1.1240, but this time price got pushed and broke below the symmetrical triangle pattern, which favors the bears to take control. If the bulls will not find enough momentum to push the Euro above 1.12, price could roll over, retest 1.1160s, and possibly lower towards 1.11.
Support: 1.1160 / 1.1110
Resistance: 1.12 / 1.1250