EUR USD at low support as Italian counting continues – click image to enlarge
EUR/USD extends its falls after the European session ended and it is now hanging on lower support. The pair is at fresh 8 week lows.
Counting in Italy continues. Markets fear a hung parliament that would lead to instability and perhaps new elections, or a return of Silvio Berlusconi. Both scenarios are possible.
EUR/USD is now trading at 1.3138, after dipping its toes below support at 1.3130. The 1.3130 line is only a minor one. The bigger move is the break below 1.3170, which was the top border of a higher range.
Further support appears at 1.31, followed by 1.3030. All these are small cushions on the way down. The most important support level is 1.30 – this is not only a round number, but this line also served as support. For more levels and events, see the euro to dollar forecast.
Update: No mercy for EUR/USD: the pair now trades at 1.31, which is the next support line. 1.3130 only held the pair for a few minutes.
Update 2: It seems that 1.31 isn’t holding either, but the break below this line needs to be confirmed.
Update 3: Italian Senate Deadlocked – Grillo can trigger new elections
Update 4:Â USD/JPY falls on safe have comeback, so, Â EUR/JPY crashes 600 pips.
Update 3: EUR/Dollar already trades at 1.3080 as Berlusconi could win both houses – a nightmare for Angela Merkel.
This is how the pair looks under 1.31, on the daily chart:
Results for the lower house are expected at 20:00 GMT. Bersani’s PD could win there. Results for the Senate are due at 23:00 GMT. Berlusconi could win there, especially if he wins his home region of Lombardy.
The first exit polls showed a victory for Bersani and Monti, even though Monti’s figures weren’t impressive. A second round of more substantial data already showed a much more complex picture and EUR/USD began the big downfall.  The range of EUR/USD is nearly 200 pips so far.
If Berslusconi gets a narrow win in Lombardy (Senate elections), it could also be thanks to the transfer of Mario Balotelli to AC Milan. Berslusconi owns the team and Balotelli is a very talented football player, even if somewhat controversial.
