• EU rejects Italy’s revised budget but does little to influence the price action.
• Rumours that the Fed might pause in spring 2019 prompt some fresh USD selling.
• Further gains remained limited ahead of the US durable goods orders data.
The EUR/USD pair reversed a last hour dip to the 1.1370-65 region and rallied over 50-pips to refresh session tops, albeit quickly retreated few pips thereafter.
After a rather muted reaction to the latest news, saying that the European Commission has rejected Italy's revised budget proposal, a fresh wave of US Dollar selling pressure helped the pair to regain positive traction and spike back above the 1.1400 handle.
Against the backdrop of easing global risk-aversion trade, the greenback was further weighed down by rumours of Fed possibly pausing the rate hike cycle as early as in spring 2019. With no official sources confirming the headlines, traders interpreted the story with caution and refrained from placing any aggressive bullish bets.
Adding to this, prospects for a further escalation of the standoff between Rome and Brussels, especially after Senior Lawmaker D’Uva reiterated that 5-Star will not go back on budget, might continue to dent sentiment surrounding the shared currency and keep a lid on any meaningful near-term up-move.
Moving ahead, market participants now look forward to the US economic docket, highlighting the release of durable goods orders, for fresh impetus and in order to grab some short-term trading opportunities.
Technical levels to watch
Any subsequent up-move is likely to confront some fresh supply near the 1.1450 horizontal zone, above which the pair is likely to make a fresh attempt towards reclaiming the key 1.1500 psychological mark.
On the flip side, the 1.1370-65 region might continue to act as an immediate support, which if broken might turn the pair vulnerable to accelerate the slide further towards the 1.1300 round figure mark.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD could extend the recovery to 0.6500 and above
The enhanced risk appetite and the weakening of the Greenback enabled AUD/USD to build on the promising start to the week and trade closer to the key barrier at 0.6500 the figure ahead of key inflation figures in Australia.
EUR/USD now refocuses on the 200-day SMA
EUR/USD extended its positive momentum and rose above the 1.0700 yardstick, driven by the intense PMI-led retracement in the US Dollar as well as a prevailing risk-friendly environment in the FX universe.
Gold struggles around $2,325 despite broad US Dollar’s weakness
Gold reversed its direction and rose to the $2,320 area, erasing a large portion of its daily losses in the process. The benchmark 10-year US Treasury bond yield stays in the red below 4.6% following the weak US PMI data and supports XAU/USD.
Bitcoin price makes run for previous cycle highs as Morgan Stanley pushes BTC ETF exposure
Bitcoin (BTC) price strength continues to grow, three days after the fourth halving. Optimism continues to abound in the market as Bitcoiners envision a reclamation of previous cycle highs.
US versus the Eurozone: Inflation divergence causes monetary desynchronization
Historically there is a very close correlation between changes in US Treasury yields and German Bund yields. This is relevant at the current juncture, considering that the recent hawkish twist in the tone of the Federal Reserve might continue to push US long-term interest rates higher and put upward pressure on bond yields in the Eurozone.