FUNDAMENTAL ANALYSIS FOR 15-Nov-2018

The common currency led the way higher for the greenback during yesterdays trading session as political woes plagued European markets. The EUR/USD pair fell to 1.1239 shortly after London opening amid mounting tensions about the Italian budget, rejected by the EU commission last week. Italian Government has till today to resubmit a fiscal plan that complies with EU rules or could face economic sanctions. However proceedings so far indicate that they do not plan to change the budget. The pair was on decline across European and North American market hours and saw sharp fall in North American market hours painting a fresh 16-month low as the common currency faced bearish pressure from both sides of Atlantic. As of writing this article, the EURUSD pair is trading at $1.1247 up by 0.25% after charting a new 16 month low at $1.1216 during North American market hours last night.

Italian Budget Headlines & German CPI Are Main Focus of Investors Today

While lack of progress in Brexit negotiations greatly added bearish pressure to common currency in addition to Italian budget woes, US market hours saw report hit market that the White House planned to revive considerations of auto tariffs against Europe and the news inspired a fresh wave of dovish investor sentiment solidifying Euro bearish price action in near future. The US President discontent with progress on his multi-front global trade war and specific consternation with Europe for circumventing renewed Iran sanctions and levying critiques over his America first initiative could be viewed as reason behind Trump administrations plans on reviving auto tariff despite agreeing a few months ago on not to push through with any tariff on European market after meeting between US & Europe.

The EUR/USD pair found bids in Asia, courtesy of renewed US-China trade optimism, however, sustainability of corrective rallies, if any, is under question as Italy is expected to resubmit a largely unchanged and a high-spend budget to the European Union today which could push the spread between the Italian 10-year government bond yield and its German counterpart to the recent high of 325 basis points. European Union wants Italy to work on controlling the deficits in its current budget but if headlines today is in line with market expectations and Italy submits unchanged budget EURO could see continued bearish price action in short term.  On release front, investors focus remains on German CPI data scheduled to release later today which is expected to remain unchanged, but a better than expected data could provide some momentum to EUR/USD relief rally.

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