The euro remains under some pressure after heavy selling yesterday brought on by renewed concerns over Italy. Ex IMF director of fiscal affairs Carlo Cottarelli accepted the Presidents request to form a government. This ‘technocrat’ solution has avoided the formation of an anti-EU leaning government, but has raised the prospect of another general election within months. The EUR/USD plunged lower yesterday after gapping at the open, with a negative bias this morning. Other euro pairs have followed suit.
The pound has not escaped selling pressure, with the GBP/JPY extending losses. The GBP/USD is uncaged for the second day in a row.
The Aussie is also struggling, despite hopes for a resumption of North Korea talks.
The USD/JPY is continuing its reversal, testing the 109.00 level which has acted as support since the start of the month.
Today we have European M3 Money Supply
At 15.00, we have CB consumer confidence
The ‘IMF solution’ has failed to support the euro, with renewed pressure this morning. With uncertainty and broader political trends at play, there is further downside potential for the EUR/JPY, especially as the yen strengthens on safe haven interest.