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Euro, US dollar and Italian Government Bond Yields Talking Points:

  • EURUSD below all three moving averages.
  • Italian government bond yields nudge lower.

We have just released our Q4 Trading Forecasts including USD and EUR.

EURUSD Nudges Higher but Move Looks Suspect

EURUSD has bounced back off yesterday’s 1.15050 low and is heading back towards 1.1600 on a newspaper report that the Italian government plans to reduce its budget deficit to 2% in 2021 after announcing last week that the deficit would be 2.4% for the next three years. This caused concern higher up in the EU who warned Italy to trim its deficit targets. Italian bond yields soared to multi-year highs yesterday on the news as investors fled Italian assets.

Italian government bond yields are lower today on the news, but the move is far from convincing. 10-year bonds yield 3.32%, down from a multi-year high print of 3.46%, while the 10-year Italy/German spread has narrowed back to around 290 basis points from 300+ on Tuesday. 10-year Italian bonds traded with a yield around 2.70% three weeks ago.

On the daily chart, EURUSD continues to find resistance from the 50-day moving average at 1.15947, followed by the 20-day ma at 1.16640. Above here the Fibonacci resistance (38.2%) comes into play at 1.1710. On the downside, support remains at 1.15081 for the time being, although a break and close below would open up 1.14480 (50% Fib) ahead of 1.1301.

IG Client Sentiment Datashows that traders are 54.3% net-long EURUSD. Recent daily and weekly changes show longs are increasing giving us a stronger bearish contrarian trading bias. See how this sentiment data can help you in your decision making process.

EURUSD Daily Price Chart (February – October 3, 2018)

EURUSD Remains Technically Weak Despite Italian Budget Chatter

Italian Budget Primer.

Traders may be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.

What is your view on EURUSD – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author at nicholas.cawley@ig.comor via Twitter @nickcawley1.