Trading at the weakest range since mid-July 2018, the single currency is facing difficult times. Rumors surrounding a spill over on European banks of the Turkish lira situation being the main driver of the steep decline. According to an FT article, ECB’s Single Supervisory Mechanism warns that three large European banks are “particularly exposed” to the lira movement, as they allegedly are important lenders to turkey, though the situation is not viewed as “critical” by the monetary authority.
Following the news, the EUR/USD dropped by over -0.60% in early trading session, an excessive move that will most probably go the other way – at least until next week Italian budget plan for 2019, as Italy’s anti-establishment coalition is expected to negotiate further flexibility with regard to EU budget restrictions for its members.
Currently trading along 1.1450, EUR/USD is expected to bounce back along the 1.15 range.
By Vincent Mivelaz
