Eurozone breakup risks are being priced out again. The eye now turns to Spain, where Rajoy is facing a no confidence vote. The exemption of Trump’s tariffs on steel and aluminium is also set to end today which adds to ongoing risks for global trade. European stock futures are still moving higher after a strong session in Asia. The Eurozone calendar is pretty packed again. Already released, Swiss Q1 GDP was revised up to 0.6% q/q from 0.5% q/q. U.K. consumer confidence came in better than expected and improved to -7 form -9, while Nationwide reported another decline in house prices over the month. Still to come are U.K. money supply and credit growth data, French HICP, the second reading of Spanish GDP, Eurozone jobless numbers and most importantly Eurozone HICP for May, which could rise to 2.0%.
EURUSD has posted a fresh rebound high of 1.1688, which is the loftiest level seen since Monday and extending the lift from the 10-month low that was seen at 1.1510 on Tuesday. The next intraday resistance for the pair come at 1.1720-1.1727, with the latter be Friday’s and Monday’s swings high. In the 4-hour chart, the next resistance are comes at 1.1750-1.1770, on the break of the 1.1720barrier. The pair looks that is likely to continue the uptrend within the day , since it is traded above 200-period EMA in the hourly chart, while MACD is sloping in the positive area, and RSI has just crossed 70 barrier, and slopes positively, with further area to be covered to the upside. Volume on the other hand, has been picked up on London open.
In long-term, the bullish strong candle formed yesterday, along with a potential closing above 20-DAY MA , at 1.1800, could suggest that bulls are back in the game , fighting to take the control of the pair.
Most euro crosses have also gained over this period, which has been concomitant with a steadying in Italian asset markets as the two main populist parties make a last-ditch attempt to form a government that would be satisfactory to President Mattarella (who had rejected proposals for a Eurosceptic finance minister) and avoid the need for new elections.
Markets will remain on tenterhooks as things develop. Perky inflation data out of Germany and Spain this week have also played a role in giving the euro a prop, though a Washington Post report that President Trump will later today announce tariffs on steel and aluminium imports from the EU, in addition to Canada and Mexico, may curtail the euro’s rebound potential.