EUR/USD clinches highs as Italy approves decree to support banks

The EUR/USD pair is seen extending its gradual recovery path into a holiday-quiet Asian session today, with the bulls closely watching the developments surrounding the troubled Italian banking sector.

EUR/USD eyeing a retest of 1.0500?

Currently, EUR/USD trades +0.08% higher at fresh session highs of 1.0444, having found solid support near 1.0430 region. The shared currency appears to have caught a fresh bid-wave against its American counterpart, after the Italian government approved the decree to support fragile Italian banks, while reports of ailing Monte Dei Paschi requesting for state aid also lifted the sentiment around the euro somewhat.

However, the trading activity around the major is expected to remain largely subdued as most traders, including Japanese traders, have moved away to celebrate Christmas, leaving thin liquidity in the market.

Markets have yet another round of US macro updates to watch out for today, after yesterday’s mixed data saw little reaction in the US dollar, except for the momentary downward spike following downbeat personal spending data. From the Euroland, we have the Gfk German climate data, while US new home sales and revised consumer sentiment data will be reported in the NA session.

EUR/USD Technical Levels

In terms of technicals, the pair finds the immediate resistance 1.0457 (10-DMA). A break beyond the last, doors will open for a test of 1.0485 (daily R1) and from there to 1.0500 (round figure). On the flip side, the immediate support is placed at 1.0419 (5-DMA) below which 1.0383 (Dec 21 low) and 1.0352 (yearly/ 14-yr lows) could be tested.