EUR/USD: Firm upcycle on increasing volumes, firs target met

When analyzing the EUR/USD , the shared currency has survived the test of the ECB minutes with fortitude. Even if the central bank noted risks in a potential deceleration in growth, in their views, the slowdown does not yet justify a change in the monetary policy outlook. The hourly upcycle in the pair continues its course, with rising tick volume and the German vs US 10yr yield spread underpinning this newly found buy-side phase. Note, the decent upside extension has met the 100% fib projection target to the pip.

It’s also important to highlight that Italian 10yr bond yields have come to a pivotal resistance level circa 3.7% this week. If the level managed to slow down the carnage, further EUR selling campaigns should be increasingly driven by USD-centric themes. However, that’s a big “IF” for now, as ECB sources suggest the central bank won’t come to Italy’s rescue if the government and the banks run out of cash. As a reminder, the ECB has been the buyer of last resort in Italian debt, and with over 15% outstanding into 2019, the level of yields matter a lot if banks are expected to pick up the slack.