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Flash: Euro-resilience to be tested on Italian protests – Investec

FXstreet.com (Barcelona) - The euro’s resilience looks set to come under pressure again this week amid large-scale protests in Rome against the policies of the new coalition government.

Around 100,000 protestors took to the streets of Rome, as the public’s trust in the new coalition continues to fade rapidly. Protesters want an end to the ongoing austerity measures with Italy currently suffering the longest recession since records began. Shortly after his appointment as Italian Prime Minister Mr Letta met other euro zone leaders to convey growing public unrest over his polices.

However, the Prime Minister has to balance the policies of his own centre-left party with the interests of the centre-right party led by Berlusconi. According to Lee McDarby, Corporate Treasury at Investec, “Euro buyers will be looking for the unrest to cause enough disruption to send the GBP/EUR to 1.20 during the near-term.”

GBP Quietly holding above 1.5200

The research team at Commerzbank team said that the support at 1.4994 is regarded as the last defence for 1.4832, the March low. They mention that short-term rallies are expected to remain capped 1.5335/85 and key resistance is regarded as its 1.5601/50% retracement of the move seen this year, and while capped here the market is viewed as having topped.
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EUR/USD consolidates around 1.2850

The euro has given up its intraday gains versus the greenback at the beginning of the New York session, although lack of volume has kept the cross within its recent range.
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