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Thomson Reuters
Nov 06 - 12:12 PM
EUR/USD - COMMENT-US Elections Carry More Weight With EUR/USD Than Italy
First appeared on eFXplus on Nov 06 - 10:40 AM

EUR/USD shrugged off a weak PMI report from Italy and was threatening a rise toward the 21-DMA as the dollar softened on U.S. election concerns.
Strong PMI for euro zone as a whole also outweighed the Italian data, tightening German-U.S.
yield spreads in favor of the single currency.
Traders were also bracing for potential dollar weakness if Democrats win the U.S. House of Representatives, which could limit Republicans' ability to enact further fiscal stimulus.
If so, that could slow economic growth and reduce expectations for Fed rate hikes, undermining the dollar's yield advantage.
If EUR/USD extends its rise, it will target resistances near 1.1550 and 1.1650.
Still, Italy will probably come back to haunt the euro.
Italy's October services PMI fell to a contractionary 49.2 from 53.3 previously and below the forecast of 52.0.
The data disappointment will likely keep budget negotiations between Rome and Brussels contentious, with Italy's government expected to be unyielding on their projections, which will be resubmitted on November 13.

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