The euro has been underperforming as markets digest, Trump’s tariff war rhetoric on his weekend Twitter musings and the Italian election results, which has seen Eurosceptic parties come to the prominence, with the centre-right La Liga poised to lead a new government, assuming it can form sufficient parties to bolster the centre-right alliance (having ruled out forming any “bizarre” coalitions). La Lega’s leader, Matteo Salvini, said that he still thinks the euro is a “bad” currency, which will come to an eventual end, but also stated that holding a referendum on it would be “unthinkable” and that financial markets “have nothing to fear.” The euro has posted losses versus the dollar, yen and most other currencies, though the declines have been nothing more than moderate.
EURUSD has gravitated around 1.2300, earlier basing at a low of 1.2268, which left Friday’s low at 1.2251 untroubled. The pair remains comfortably above last week’s low at 1.2154, however, bearish view still remains, with EURUSD failing to move above 9-day’s High at 1.2360. Earlier, despite Euro’s weakness, dollar got slightly lower following the non-manufacturing ISM, which was slightly lower than the previous outcome, but better than consensus forecast. EURUSD ticked up to 1.2330 from 1.2320. However, a possible reversal to the negative momentum seen in EURUSD, could only be triggered on the break above the 9-day’s resistance level at 1.2360, which is also the 50% Fibonacci level since February’s decline. Such break could retest the 1.2400 level. Immediate Support comes at 1.2260.
U.S. ISM February non-manufacturing index fell 0.4 points to 59.5, correcting only modestly after jumping 3.9 points to a 12-year high at 59.9 in January, as impetus from tax reform and the bullish impacts of disaster rebuilds and global growth remain supportive. The index was at 57.4 last February. The employment component fell back 6.6 points to 55.0 following the 5.3 point jump to a record high 61.6 (data goes back to 1998). But, new orders rose another 2.1 points to 64.8, on top of the 8.2 point surge to 62.7 to start the year. New export orders improved to 59.5 from 58.0, while imports fell to 50.0 from 54.0. Price paid slipped to 61.0 from 61.9.
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