Technical Overview: EUR/USD is under pressure below its key resistance level at 1.1610, which should limit the upside potential. The declining 50-day moving average is playing resistance role. The relative strength index is below its neutrality level at 50. The pair rebounded 0.7% up to 1.1728 earlier in the session before reversing course to the downside and falling sharply to a day-low of 1.1604. Therefore, as long as 1.1610 holds on the upside, look for a drop to 1.1540 and 1.1500 in extension.
Fundamental Overview: the euro remained vulnerable amid the political storm in Italy. President Sergio Mattarella vetoed the appointment of a euroskeptic economy minister recommended by anti-establishment parties 5 Star Movement and the League, while asking International Monetary Fund veteran Carlo Cottarelli to form a government. It is widely expected that the situation would call for fresh elections and turn focus on Italy's participation in the euro. Adding to pressure over the single currency were reports that Spanish Prime Minister Mariano Rajoy would face a vote of confidence in his leadership on Friday.
Chart Explanation: The black line shows the pivot point. Currently, the price is above the pivot point which is a signal for long positions. If it remains below the pivot point, it will indicate short positions. The red lines show the support levels, while the green line indicates the resistance levels. These levels can be used to enter and exit trades.
Resistance levels: 1.1645, 1.1675, and 1.1700
Support levels: 1.1540, 1.1500, and 1.1460