- Summary:
- The Euro continued its downward slide on Friday as the comments by ECB's Olli Rehm and political developments from Italy continue to weigh on the Fibre.
The Euro resumed its downward slide below the 1.1100 mark on Friday as the comments from Olli Rehm (ECB’s rate-setting committee member) as well as the fallouts from the Italian political spacesingle currency continues to weigh on the single currency.
In an interview granted to the Wall Street Journal, Oli Rehm hinted at an expanded stimulus package from the European Central Bank in September; comments which sent the Euro tumbling on Thursday in the late New York session.
Furthermore, events in Italy also continue to weigh on the Euro, with Italian lawmakers pushing for a confidence vote against the Prime Minister Giuseppe Conte next week. The political risks from the Italian political space, where a worst case scenario would see Conte’s exit and fresh elections as early as October, are seen by analysts to pose strong headwinds for the Euro, already struggling from a string of poor manufacturing data from powerhouses Germany and France.
Technical Play for EURUSD
The price action for the week culminated on Thursday with the formation of a near-term bearish pennant. Price action broke through the bearish pennant and triggered a short order I initiated yesterday on the EURUSD. I expect the initial target to be the S1 support pivot at 1.1075, and further targets at the 1.1055 price level (S2 pivot) if downside momentum is maintained.
Failure to break the 1.1075 price level could lead to a recovery bounce. Therefore any active short trades requires vigilance and use of trade protection tools to avoid being countered by such possible recovery bounce moves.