Current trend
The single European currency is still trading downwards. Last Friday, the important support level 1.2246 was broken and bears' next target is 1.2150. Standards and Poor’s agency's decision to lower its rating down to “BBB-“ for 2 largest Italian banks Unicredit and Intesa Sanpaolo is putting pressure on the currency. The rating was revised given some problem assets accumulated by the banks, the Agency said. However, bankruptcy seems hardly possible as the government is unlikely to allow such large credit institutions to crash.
France's week economy, where business confidence index remained at the same level of 94 points despite a forecast of 96 points, is another factor that sends the euro to the bottom. Besides, the high unemployment rate of 10% badly affects consumer activity and economic growth. The French Government announced repeatedly about its plan of creating new jobs at its own expense, but this policy may increase the public debt and be rejected by the EU authorities.
The US housing sales data and EU consumer confidence index will be published today. Real estate sales are expected to fall to 5.21 million. Consumer confidence may decline to the level of -11.
Support and resistance
The last December low of 1.2246 is the nearest resistance level. A psychologically important level of 1.2200 serves as support.
Trading tips
Short positions may be opened with the target at 1.2150 and protective order at 1.2246 after the price breaks the level of 1.2200.
Dmitry Agurbash
Analysts of LiteForex Investments Limited
