EUR/USD: watching Italian Monte Dei Paschi and downside risks in the euro

Currently, EUR/USD is trading at 1.0435, up 0.01% on the day, having posted a daily high at 1.0442 and low at 1.0433.

While the markets are otherwise quiet on the data front ahead of the Xmas break, we have the Italian banking crisis to contend with and we are monitoring the various risks posed for the situation, noting that the Italian cabinet meeting is underway where officials are discussing a potential rescue plan for Monte Dei Paschi, just one of several banks that are in danger of failing in Italy and Europe.

Here is an outlook for Europe 2017 that touches on the banking crisis:

European Economic Forecast 2017: An EU under siege from within, call in the populists!

Meanwhile, EUR/USD has been attempting to recover after a rally in the dollar in the final quarter of 2016, fuelled by Trump and the FOMC. "We look for the market to struggle on moves to the 1.0505/20 band," suggested analysts at Commerzbank.

EUR/USD levels

Spot is presently trading at 1.0436, and next resistance can be seen at 1.0440 (Hourly 20 EMA), 1.0442 (Daily High), 1.0442 (Weekly High), 1.0461 (Daily Classic R1) and 1.0488 (Hourly 200 SMA). Support below can be found at 1.0434 (Daily Open), 1.0433 (Daily Low), 1.0423 (Hourly 100 SMA), 1.0422 (Daily Classic PP) and 1.0421 (Yesterday's Low).