The Euro drops this morning as investors worry about the outcome of today's Italian budget plan meeting. Investors are concerned that the announced budget plan will not be in compliance with EU regulations, which means that the Italian government will be taking on more debt than what is deemed acceptable from a risk management standpoint. Throughout the day, the pair will also be affected by U.S Dollar fundamentals with the release of the Final Second Quarter U.S GDP figures. Bear in mind that this number will be closely watched since yesterday's FOMC statement was mixed and did not provide a clear bias in regards to the future of the Fed's rate hike plan. A better than expected reading will be in support of a stronger U.S economy and help the Fed stick to their plan to maintain their rate hike spree.
As uncertainty looms regarding the Italian budget plan, the Euro was able to break below the 1.17233 support level. Adding to the momentum, the pair broke below both the 13 and 50-period moving averages paving the way for a drop towards the 200-period moving average and the 1.16414 support level.
Support: 1.17233 1.16414
Resistance: 1.17929 1.18365