EURUSD Analysis: Short-Term Support Appears, Italy’s Knuckles Rapped

EURUSD – PRICE, CHART AND TECHNICAL ANALYSIS

• EURUSD finding support on the four-hour chart.
• Italian sovereign rating unchanged but outlook lowered.

 shows how retail are currently positioned in EURUSD - 43.3% net-long – normally a bullish contrarian set-up. However recent positional changes warn that prices may soon reverse lower despite retail remaining net-short.

EURUSD FINDING SHORT-TERM TECHNICAL SUPPORT FOR NOW

In what is expected to be a quiet session due to the US Labour Day Holiday, EURUSD currently sits on a noted technical support level and looks weak in the short-term. Trading ranges are expected to be narrow today, so a break lower may not occur soon, but technical indicators currently point to a lower price.

As seen on the four-hour chart below, EURUSD currently trades just above the 200-day moving average at 1.15852 and has held this level for the last five candles. The pair also trade below the 20- and 50-day moving average and remain at, or near, levels seen 10-days ago. The RSI indicator is back at a two-week low and just trading above oversold territory which may provide the pair with some short-term support.

EURUSD FOUR HOUR PRICE CHART (JULY 26 – SEPTEMBER 3, 2018)

ITALIAN SOVEREIGN RATING UNCHANGED BUT OUTLOOK NOW NEGATIVE

Late last week, rating’s agency Fitch left Italy’s credit rating (BBB) untouched but lowered its rating’s outlook to negative from stable. The agency said that they expect a ‘degree of fiscal loosening that would leave Italy’s very high level of public debt more exposed to potential shocks'. This warning from Fitch was followed by commentary from the Italian economy minister who said that they would come up with concrete policies to help them to respect their European Budget Commitments.

Italian government bond yields remain elevated with the 2-year quoted at 1.45% and the 10-year offered at 3.20%, a level last seen in mid-2014.

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