With EUR/USD having tested our 1.3000/1.3050 target, we are now standing aside and monitoring this important zone where the December lows and daily cloud base converge. A close below this zone would likely suggest a more protracted pullback, especially as global equities also appear vulnerable in the short term. A flight into US Treasuries is a sign that negative risk sentiment is becoming more pronounced. The concerns around the Italian election are providing further reason for the downtrend to extend in Italian stocks (MIB Index) – we view this as meaningful, given that both Italian stocks and EUR/USD topped out in the same week at the end of January.
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Barclays