EUR/USD hangs near YTD lows, just above mid-1.1200s

   •  Italian budgetary concerns weigh heavily on the shared currency. 
   •  The ongoing USD upsurge further aggravates the selling pressure.
   •  Focus remains on Italy’s revised budget proposal on Tuesday.

The EUR/USD pair remained heavily offered through the mid-European session on Monday, albeit has managed to rebound around 25-30 pips from fresh YTD lows touched earlier today.

The pair extended last week's sharp rejection slide from the key 1.1500 psychological mark and remained heavily offered for the third consecutive session amid growing concerns over Italy's budget proposals

Comments by Italy's deputy Prime Minister Luigi Di Maio, saying that the only way to respect EU parameters is to make a suicidal budget law that would bring on a recession pointed to a possible escalation of the standoff between Rome and Brussels.

Market worries were evident from a continuously widening of the yield spread between Italian government bonds and the benchmark German bunds, which kept exerting downward pressure on the shared currency.

Adding to this, the ongoing US Dollar upsurge to over 17-month tops, supported by firming market expectations that the Fed will continue with its gradual monetary policy tightening cycle even beyond 2018, further aggravated the selling pressure. 

The pair tumbled to the lowest level since June 2017, with possibilities of some heavy stops being triggered below the very important 1.1300 horizontal zone accelerating the downward trajectory during the early European trading session. 

The bearish pressure now seems to have receded, at least for the time being, as market participants now seemed to await any fresh update, as Italy is expected to submit a revised draft budget plan to the Commission by November 13, i.e. tomorrow. 

Technical outlook

Yohay Elam, FXStreet own Analyst writes: “The Confluence Detector shows that the next line to watch is 1.1235, just below the recent low. Further down, 1.1210 awaits close by. The next level is 1.1100, last seen in June 2017.”

“1.1300 now turns into a line of resistance. It is followed by 1.1330 that supported the pair in late October. 1.1360 was a temporary support line in early November, and the round 1.1400 level served as support when the EUR/USD traded on the high ground last week,” he added further.