EUR-USD Technical Analysis: Where can it go from Here?

Italy put on quite the show the other night.

Shortly after the country voted “no” on reforms that could have stripped the Senate of its powers, modernizing the legal framework, it was chaos.

Prime Minister Matteo Renzi resigned.

The euro would hit 1.0507 -- its lowest point against the US dollar since March 2015.

Chart from Bloomberg.com

 

_____________________________________________________________________________________

Learn Techniques and Strategies from Pro Traders and
Receive a Funded Account up to 250,000 USD! Learn How Here

_____________________________________________________________________________________

 

Italian banks Monte de Paschi fell by more than 5%.  UniCredit dropped more than 6%. 

For the second time in months, the region was plunged into financial uncertainty.

Then, all of a sudden, the clouds broke, fear abated, and the day went on as normal.

The Stoxx Europe 600 bounced back nearly 1.4%.  Italian banks were up 0.5% after falling more than 4%.  The euro – after falling to a 20-month low – rebounded.

However, visible signs of stress still appear in the financials.  The largest banks still hold a combined $300 billion in bad loans and debt securities. 

With regards to the EUR-USD, after closing near the 1.0660 level last week, it broke down on the open, continuing to pull back to 1.0507 at one point before stabilizing and turning higher.  The bears are now in control at which point prices broke even higher.

It last traded at 1.0765 and shows no signs of cooling at this point.

A recovery could extend near 1.08, short-term with possible tests of 1.09.

While there was a lot of talk that the Italian banking system could collapse and spread to other European banks, authorities threw cold water on it. 

Germany’s finance minister noted there was no reason to talk about a euro crisis, as the EU finance commissioner said he was confident that Italian authorities would manage the situation well.  Because of that sentiment, stocks bounced back, resulting in the EUR-USD advancement to 1.0765.

_____________________________________________________________________________________

Learn Techniques and Strategies from Pro Traders and
Receive a Funded Account up to 250,000 USD! Learn How Here

_____________________________________________________________________________________