EUR/USD (a 4-hour chart)
Euro-political instability has never gone away, it was just dozing. Italy managed to make a recipe for a successful "political deadlock" for the global capital markets. Italy has always considered as one of the strongest countries in the periphery of the Euro. The country which managed to inflict a heavy blow to recent efforts to calm the debt crisis of the euro-periphery. Italian people voted against the austerity and reform, and may be in the process of voting against 17 members of the single currency.
As we know markets like uncertainty. Italian bonds soared and stocks fell as investors dumped Italian debt products and fled to safer German Bunds. Rejection of the policy of austerity Italian voters go the way Monty suggested will raise doubts about the ECB's pledge to support the struggle of the Euro-crisis economy.
The plan that can calm down the agitated markets can be activated only for the countries that support the conditions related to the international financial assistance. But markets will now be afraid of Italian borrowing costs (4.72%), which are returned to the levels of last summer (6.68%).
The European currency again fell below 1.31 yesterday, could not resist that level. The next goal is now below 1.30.
Today, investors will pay attention to the bond auction in Italy, to assess the direction of the euro/dollar in the short term. Italy will place the 5-year and 10-year bonds, which are likely to be in strong demand, taking into consideration the high returns in recent years, and a small amount of each issue. However, we can not exclude the fact that the tender will be weak due to lingering concerns that could cause further downward pressure on the pair EUR/USD.