EUR/USD
The Euro is going to come under increasing pressure with questions being raised over the newly formed Italian coalitions intentions for staying in the Euro. If you thought the risk of Euroexit had disappeared, think again.
According to a Bloomberg article I picked up this morning Italy has the largest absolute debt pile in the EU and the second-largest, after Greece, as a percentage of GDP, at 132%. Bloomberg make the point that the coalition's plans are actually sending the signal, albeit implicitly not explicitly, that it has no intention of ever paying back its debt. Exit is their end game, and they know it. This article argues that the market hasn't fully registered this fact yet. Will they exit, won't they? Of course we don't know but even the concerns are going to weigh on euro sentiment today.
In contrast to the Euro the US dollar has found strength in previous sessions and, as of this morning, that looks set to continue. So, we have our bias EUR/USD short.
The EUR/USD pair has a large 962 mln option expiry at 1.760 which also coincides with the 23.6 fib level drawn from last sessions highs. Pay particular attention to that level today for a good place to short from.
Entries can also be found for this trade at 1.1760 and 1.1783 and 1.8000. See chart below. Use this free tool to enter in a price alert.
Risk to this trade are any Euro positive news, but as it is a quiet trading day, it is most likely to be a subdued session.
