EUR/USD looking for a boost after dumping into a fresh yearly low.
Italian politics are derailing the calm mood in Europe, and the ECB may have a drawn-out fight on its hands.
The EUR/USD caught a mild lift in the early Asia session, but 1.1825 is proving to be a sticking point for the pair, and the Euro is struggling to develop any legs on a meaningful technical correction. Souring core inflation figures for April sent the EUR/USD into a new 2018 low of 1.1763 before recovering slightly.
Italian politics is also weighing on the Euro, with Italy’s 5 Star and League parties forming a coalition. League and the 5-Star Movement are both considered largely nationalistic and anti-Eurozone, and their coalition is moving quickly to begin seeking debt forgiveness from the European Central Bank (ECB).
Little impactful data sits on the calendar for Thursday, and volatility could pose a problem as the US Dollar drives the broader markets, with US Treasury yields still sitting at multi-year highs.
EUR/USD levels to watch
The Euro has managed to haul itself back over the 1.1800 price level, but bearish pressure is still mounting on the pair, and as FXStreet’s Chief Analyst Valeria Bednarik noted, “the 4 hours chart indicates that the bearish strength is still strong, as the Momentum barely pared its decline within extreme oversold levels, while the RSI is posting a modest bounce from oversold readings, as the pair is far below all of its moving averages, which present sharp bearish slopes. Still, the short-term candle formation favors an upward correction, that will hardly be enough to revert the dominant bearish trend. Below the daily low, a more relevant support comes at 1.1740, December monthly low, with a break below the level increasing chances of a continued decline toward the 1.1660 region the next relevant support.”
Support levels: 1.1765 1.1740 1.1710
Resistance levels: 1.1820 1.1850 1.1880
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