Failing to overtake the 1.3300 psychological round figure, EURUSD fell on the session, dipping below 1.3200. Subsequently, it looks like further declines can be expected on a technical basis, bolstered by bearish fundamentals on the session.
Consumer Sentiment Dips
According to the GfK Group, German consumer sentiment is likely to deteriorate in January according to recent research report findings. GfK index readings dipped to 5.6, compared to a 5.9 expected by market forecasts – the second decline in 3 months and bearish for the German economy.
Especially worrisome were the subindex readings that showed major declines in economic expectations and anticipation of further spending. Both subcategory readings dipped, with the economic expectations gauge dropping 3.3 points to a reading of -17.9.
The survey is additionally bearish for the single currency when considering that both investment and business community sentiment rebounded to positive territory in the month of December.
Eyes On Monti
With a parliamentary passage of the 2013 Italian budget likely to come this evening, Prime Minister Mario Monti is expected to tender his resignation shortly after the event. This places significant attention on a press conference where Mr. Monti is expected to announce his future plans this Sunday in Rome. Although speculation is surrounding the likelihood that the former political head will not join the race, there is a chance that a last minute deal may be struck to form a coalition party.
Former Prime Minister and now head of the People of Freedom Party has noted a willingness to back Mario Monti as the country’s PM. However, the move would require a coalition with the Northen League and not the Democratic Party.
An announcement to enter the political race by Mario Monti would be considered temporarily bullish for the single currency as it would leave things as the status quo – with both Italian austerity policy and the European Union leaders.
The current decline is likely to target upcoming initial support at 1.3133, which is being reinforced by the 1.3100 psychological round figure. A downside break of the figure would open scope for a decline to 1.2981.