Media suggest that the 5 SM and the League are on the verge of forming a government in Italy. The main positions of the parties seem to concentrate on tax cuts and social welfare spending, while there seems to be a dispute about who the actual PM candidate will be. The two parties seem to be on a collision route with Brussels and could provide uncertainty in the Euro zone if they come to power. Should there be further headlines about the programs of the two parties colliding with Brussels, we could see the EUR weakening.
EUR/USD dropped yesterday breaking the 1.1806 support line, however made up for most of the losses later on and continued to trade above it during today’s Asian morning. We see the case for the pair to continue to trade in a sideways manner with some bullish tendencies. Should the pair come under selling interest we could see it breaking the 1.1806 support line once again and aim for the 1.1715 support barrier. Should it find fresh buying orders we could see the pair reaching or even breaking the 1.1882 resistance level.
Israeli Prime Minister Benjamin Netanyahu went live yesterday on Israeli TV to present what he called evidence of a secret Iranian nuclear weapons program. Most of the evidence presented, dated to the period before the 2015 agreement was signed. Iran officials replied by stating Netanyahu’s show was a childish and ridiculous game and was aimed towards imposing more pressure on the United States to pull out of a 2015 nuclear deal with Iran. Further escalations on the matter could strengthen Oil prices as Iran is significantly related with the black gold market and is a major partner in the Organization of the Petroleum Exporting Countries.
EUR/USD dropped yesterday with analysts and traders giving as a reason the German Retail sales for March unexpected decline. On the USD side, data released on Monday showed that U.S. consumer prices accelerated in the year to March. Market focus remains on this week’s FOMC statement for any comments made on a possible June rate hike which could create volatility for USD pairs.
It must be noted that EUR/USD is following up in its downward slide incepted since the 19th of April. Should the bears continue to have the upper hand on the pair, we could see it breaking the 1.2090 support level and aim for the 1.2035 support barrier. If the bulls take the reins we could see the pair breaking the 1.2135 resistance line and aim for the 1.2175 resistance level.
Russia expelled 60 diplomats on Thursday and ordered the US ambassador to close the St. Petersburg consulate. White house officials stated that Russia’s response was not anticipated and that it marked a deterioration of their relationship. Worries increased, as the Kremlin spokesman stated that Moscow is closely watching any ideas floated by British PM Theresa May to limit the marketing of Russian debt by London. On other headlines, the UN Secretary General Guterres, stated yesterday that the situation was “similar to a large extent, to what we lived in the cold war”. Overall, there could be further escalation of the situation and more negative headlines could increase uncertainty.
EUR/USD traded in a sideways manner yesterday between the 1.2355 resistance line and the 1.2230 support line. We might see the pair continue to trade in the same manner today, however with some bullish tones as the financial data due out today could support the common currency. Should the bulls take over the market we could see the pair breaking the 1.2355 resistance line and aim for the 1.2455 resistance level. On the other hand should the bears take the reins we could see the pair breaking the 1.2230 support line and aim for the 1.2100 support barrier.