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FxWirePro: EUR/USD shows dead cat bounce on US-China trade talks optimism, good to sell on rallies

EURUSD has shown a dead cat bounce after hitting 17-month low on account of easing trade tensions between US and China. The Italy budget deficit problem is major issue that putting pressure on Euro. European Commission has rejected Italy’s budget plan as Italian parties are sticking on to 2.4% deficit which is higher than EU target of 2%. The pair jumped nearly 40 pips and started to decline. Markets eye German ZEW economic sentiment for minor movement. It is currently trading around 1.12356 0.16% higher.

 

The Italian 10 year bond yield is trading higher and jumped more than 10% from low of 3.21% . The spread between German bund and Italian 10 year has widened to 310 basis point from 280.

 

On the lower side, near term support is around 1.1200 and any break below targets 1.11500/1.1100 level.

 

The near term resistance is around 1.1285 (23.6% fib) and any break above targets 1.1305/1.13380 (5- day MA)/1.1380 (10- day MA)/1.1435. The pair should break above 1.1500 for minor bullishness.

 

It is good to sell on rallies around 1.1260-625 with SL around 1.1300 for the TP of 1.11480.

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