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EURUSD Thursday
EURUSD Thursday

Since the start of the week, the EUR/USD pair is having a difficult time making a decisive move in either direction and closed near flat yesterday at 1.1349. After fluctuating in a relatively tight 50-pip range, it seems that traders ignored Tuesday’s stock market sell-off and declining US T.Yields as common currency which usually gained upward price action on subdued demand for USD failed to gain upper hand despite hawkish Eurozone macro data and Euro positive development in bond market. The spread between the two-year US Treasury yield and its German counterpart is down at least 16 basis points from the high of 358 basis points seen a month ago, while Italy-German 10-year yield spread has narrowed to 279 basis points – the lowest level since Oct. 4. However above mentioned factors have not put a bid under the EUR, possibly due to fears of economic recession that stems from the Treasury yield curve inversion.

Comments From Italy’s Deputy PM on Budget Negotiations Paint Positive Picture For EURO

Investor sentiment was further hurt as equity markets have displayed bearish price action for two consecutive trading session and equity markets continue to maintain bearish move even in Asian trading hours today. The EURUSD pair has remained stable over recent days and considering that there are no major events on the agenda. With the U.S. markets staying close on Wednesday, the second half of the day didn’t offer any catalysts and allowed major pair to go into a consolidation phase in favor of the common currency. As of writing this article, the EURUSD pair continues to maintain flat price action and is trading at 1.1348 down by 0.01% on the day. On Italian budget related updates, Italy’s Deputy Prime Minister Luigi Di Maio commented that the climate was changing in budget talks with the EU and reiterated that the government wanted to make sure to avoid any disciplinary actions from the EU during his interview with ANSA.

The latest comments from Italy’s deputy PM is viewed by many analysts and investors as hawkish update for EURO as budget negotiations could end in favor of EU which changes the medium term outlook of EURO in a positive manner. On release front today, European calendar schedule is relatively subdued with only release for the day being German Factory Orders while US calendar will see release of ADP Non Farm Employment, Initial Jobless Claims, Non Farm Productivity, Markit Composite PMI, Services PMI, ISM Non Manufacturing PMI & ISM Non Manufacturing Employment data updates. After holiday, today’s US trading session is expected to see high level of volatility owing to multiple high impact news updates. When looking from technical perspective the EUR/USD pair is trapped in a symmetrical triangle pattern and an extended move is likely to happen in the direction in which the range is eventually broken.

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