The Euro experienced a fluctuation during Monday’s trading with the start of the week after recording a week high before losing its gains to dominate volatility as the markets observe the results of the Italian election.
Expectations and opinion polls indicate that the Italian elections will be without a majority and the center-right coalition led by former Italian Prime Minister Silvio Berlusconi may win majority of the seats. On the other hand, the Euro Zone released today’s PMI Data for the Services Sector in February with expectations for the Index to stabilize at 56.7.
Despite recent gains, the EURUSD pair still has to break above the resistance levels of 1.2340 and 1.2360 to confirm a continued uptrend. A drop below the close support at 1.2320 would affect the uptrend and introduce a sideways trend.
The Dollar is retreating against the Canadian Dollar, as the Greenback rallied against major currencies on concerns about the Sino-US Trade War. The pair’s success in breaching near resistance levels at 1.2920 will boost optimism and push the price test to 1.2980. Only the return of prices below the 1.2800 resistance level can temporarily alleviate the optimism.
The US Dollar rose slightly against the Japanese Yen on Monday, following declines seen over the previous week as the Yen received support from the continued decline of Asian and Global Stock Indices, on the back of political concerns that have increased since US President Trump announced a tariff hike on Steel and Aluminum radars.
The return of selling pressures on the pair’s movement will reinforce the previous bearish trend. A break below the support levels near 105.40 will consolidate the declines and cause a test at the 105.20 levels. The return of the price above the resistance level at 105.80 would temporarily ease selling pressure.
Gold prices rose for the second day in a row, as demand for safe haven assets in the financial markets increased following tensions and concerns over the looming Sino-US Trade War.
The US Dollar reversed its downward trend before the end of last week as a result of President Trump’s decision to raise tariffs on Steel and Aluminum Imports as fears of a trade war with China mount.
Technical reading continues to show that prices are still moving within a corrective trend towards a general bearish trend. Resistance levels at 1326 and 1330 are still considered to be the most important short-term levels. These levels are likely to re-introduce a downtrend, while at the same time any short-term trend reversal will negatively affect price action.