The Single currency relentlessly slips as Turkey's troubles continue to dominate headlines. Investors worry that European banks will be damaged by their exposure to the Turkish Lira. Bank investments in Turkey will curb bank profits given that the Turkish Lira depreciated over 35% this year. Last week, the ECB warned that non-hedged Turkish borrowers might begin to default on foreign currency debt given the steep drop in the Lira. Adding to pressure on the Euro, the U.S Dollar continues to strengthen given the series of positive economic data releases with the latest being the better than expected Core CPI which printed at 2.4% relative to the expected 2.3%.
The Euro continues to break below support levels. Most recently, the Euro broke below the 1.618 Fibonacci extension and the 1.13957 key support level. The break of these significant levels coupled with the negative sentiment surrounding the Euro signal a drop towards the next support level at 1.13432.
Support: 1.13432 1.12972
Resistance: 1.13957 1.14319