In the immediate-term scheme of things, we believe that there will be continued pressure on the Euro due to the uncertainty surrounding the next Italian government. Further, we think that given the power of social media and the strong popular support for Beppe Grillo’s Five Star Movement, his call for an online referendum on Italy’s membership in the EUR could put further downside pressure on the cross. As you can see in the chart below, the EUR/USD (FXE) is dangerously close to breaking its TAIL line of support at $1.30.
