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• Technical Outlook
The U.S. dollar decline versus most major as optimism returned to the market following headlines suggesting that Italy’s Prime Minister would resign after the new budget law passes parliament approval. Stocks advanced steadily, as we saw Nasdaq gaining 1.20% and the Dow Jones by 0.84%. We had Crude Oil rising by 1.5%, closing at $96.95/Barrel. Gold declined by $0.55, closing at $1,785/ounce.
The Euro gained versus the dollar after Italy’s Prime Minister announced that he would resign once the austerity plan get parliament approval. Analy
EUR/USD: The latest break below 1.3480 should now open a fresh downside extension which ultimately exposes a retest of the key lows from October at 1.3145. Look for any rallies to be well capped below 1.3700, while ultimately, only back above 1.3870 would negate outlook. Once 1.3145 is taken out, it will negate the corrective October price action and should result in a more aggressive bout of selling into the 1.2000’s. W
Euro is much lower in forex trading, heading down as the news out of Italy worsens. Even though Italian PM Silvio Berlusconi has agreed to resign, investors are not reassured. Yields on 10-year Italian bonds have surged beyond 7% as investors expected a default.
The concerns about Italy, as well as worries about Greece, Spain and Portugal, are bringing risk aversion to light. For now, though, it’s Italy that is drawing the attention. Forex traders are reluctant to take on risk, and are, instead, fleeing to safe havens. The U.S.