The Italian Election over the weekend has added a spark to Euro FX markets this morning, with volatility driving price as the market digests the implications. In the EURUSD pair, price has tested support in the form of the 4-Hour moving averages, breaking through all of the major ones, e.g. the 50, 100 and 200-period MAs and then rebounding back above them. This is symptomatic of major political events with unclear outcomes. The market will attempt to find strong support and resistance and set up a trading range until one breaks. Support can now be found at 1.22687, (today’s low) followed by 1.22512, (Friday’s low). The 1.22400 and 1.22141 levels are areas of support below, with the 1.21640 further down. Price successfully tested the previous trend line last week at 1.21544, with this trend line currently at 1.21270. Resistance overhead is found at 1.23637 (today’s high) and 1.23759, with a high probability these levels will be tested in the coming hours. There is strong combined trend line and level resistance at 1.24593 on the chart. Further resistance is found around the 1.25372 area up to +/-20 pips either side. EURJPY This pair has been descending since reaching the 137.500 level on the 2nd of February. It has tested the falling supporting trend line today at 129.517 and moved back above it. On Friday, it tested the line which held as support. A further test of this trend line targets 128.780 and 128.000 below. Resistances overhead come in at the falling resistance trend line at 130.850, followed by the 50-period MA at 131.000 and the 131.093 level. The 100-period MA at 131.920 and the 132.262 are the top of an area of consolidation, which was previously supportive. A break above this area could signal an attempt to reach higher to 133.000. The 200-period MA has just slipped below that level and is currently at 132.905 and falling. Further resistance is found at 133.820, with 135.000 above.
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