EUR/USD retreats from 1.0800, dollar under pressure

EUR/USD met some selling pressure in the 1.0800 neighbourhood on Monday, now retreating to the 1.0775/80 band following the European open.

EUR/USD attention to US releases

Spot has come down from fresh 3-week tops near the 1.0800 handle seen on Monday after markets quickly shrugged off another political risk event following the ‘No’ win at the Italian referendum.

Although Italian PM M.Renzi will stay in office for the time being, rumours of snap elections to be possibly held in February are already surrounding the political skies in Italy, with candidates like Delrio, Padoan and Grasso sounding as firm alternatives to succeed Renzi. All in all, the effervescence around the recent event seems somewhat alleviated now, although the uncertainty in the political arena is poised to grow bigger in the upcoming weeks.

Data wise in Euroland, Q3 GDP figures are due later while German Factory Orders have expanded at a seasonally adjusted 4.9% on a monthly basis in October. Across the pond, October’s Trade Balance figures and Factory Orders are due later in the NA session.

On the positioning front, speculative longs have climbed to the highest level since later October 2013, while net shorts are at 3-week tops.

EUR/USD levels to watch

The pair is now up 0.11% at 1.0775 and a break above 1.0798 (high Dec.5) would target 1.0815 (38.2% of the November drop) en route to 1.0848 (low Oct.25). On the flip side, the immediate support aligns at 1.0503 (2016 low Dec.5) followed by 1.0457 (2015 low Mar.16) and then 1.0332 (monthly low January 2003).