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Monday, December 5th
Yesterday Italian PM M.Renzi failed on his attempt to hold a constitutional reform, without meeting any support from Italian residents at the recent national referendum, that lead to significant moves across the FX market. The politician admitted his defeat and announced decision to resign after the final results were published. Moreover, M.Renzi noted that it was clear win of “No” voters and he will take full responsibility for the defeat. Also PM was surprised by a high level of turnout during referendum. Many of experts have already compared Italian referendum with Brexit.
The EUR/USD pair remains weak at the start of this week following the Italian referendum. Today the pair fell sharply refreshing its nearly two-year lows at 1.0506 level. However, pair’s downslide was capped as market participants were expecting negative outcome of the referendum and have managed to price-in the results into the pair. However, seems that bulls are slowly taking control over the pair in early Europe, allowing it to retake the 1.06 level. Today most likely the pair will remain under influence of recent political events from Euroland.
Following market sentiments, the GBP/USD pair is trading with moderate losses at the start of this week. However, the pair was able to perform minor recovery and managed to get back to the region of the 1.27 level. Today the pound will continue to stay under bearish pressure as ongoing hard “Brexit” concerns coupled with negative risk sentiment after crucial Italian referendum will remain as main drivers for the pair while UK Service PMI will also be able to provide the pair with near-term impetus.
The dollar/yen pair retakes the level of 114 as the market enters into European trading session. Today during Asia, the pair fell to its 3-day lows just below the 113 level as fresh wave of risk aversion sentiments triggered by Italian referendum approached the market. However, seems that the pair has lost its bearish momentum and now is gathering fresh pips in response to the latest comments from Japanese PM S.Abe, that BoJ should take appropriate steps to reach inflation target level of 2%. Such comments of PM have triggered fresh wave of speculations regarding further BoJ’s monetary policy easing measures. Today traders will focus on US ISM Non-Manufacturing PMI while risk sentiments will continue to drive the pair during European session.
The main events of the day:
UK Service PMI – 11.30 (GMT +2)
Speech of the ECB President M.Draghi – 16.00 (GMT +2)
US ISM Non-Manufacturing PMI – 17.00 (GMT +2)
Speech of the BoE Governor M.Carney – 19.00 (GMT +2)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.0593 R. 1.0725
USDJPY S. 112.78 R. 114.54
GBPUSD S. 1.2509 R. 1.2845
USDCHF S. 1.0045 R. 1.0149
AUDUSD S. 0.7373 R. 0.7507
NZDUSD S. 0.7058 R. 0.7186
USDCAD S. 1.3220 R .1.3350
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