EUR/USD pares earlier losses and moves higher
Of note, the pair has bounced off the support region close to 1.1575 and forms a bit of a double-bottom pattern. Price has now recovered back above the 1.1600 level and the next key level for buyers to aim for will be the 100-day MA @ 1.1650.
However, near-term price bias remains more bearish as price trades under the two key hourly moving averages so unless price moves back above 1.1650, I'm still inclined to believe the move here is still more towards the downside.
As I mentioned before, I find it difficult to see the euro pull off any sustained rallies as long as the Italian debt situation remains in focus this month. But stuff like this will help alleviate the pain a little:
Italian bonds are pulling off a decent recovery as the session moves along, with 2-year yields basically "filling the gap" now. If Italian investors are able to find some calm in bond yields, then the euro could see some reprieve as well.
But the odds of that happening is rather slim as political uncertainty remains at the forefront to drive up volatility. Investors may be able to find some short-term reprieve every now and then, but sentiment is just continuously deteriorating.
Add to the fact that at the end of the month there's a possible ratings downgrade to follow, the risks are skewed to the downside. It's a bit too much of an ask to see the Italian government propose a EU-friendly budget at the end of the day and that realisation will continue to weigh on Italian assets and the euro this month.
