The EURUSD cross edged higher on........>

EURO-DOLLAR: The EURUSD cross edged higher on Monday as the USD's strength faded

in NY dealing, after support at the intraday low/1.618% swing of the

1.1823-1.1996 move (1.1717/16) held. Initial pressure had come from broader USD

strength & ECB's Nowotny suggesting that "euro-area inflation will not rise

dramatically." Elsewhere Italy's President is due to meet with the M5S & League

party leaders after receiving their PM nomination.

- Our POV noted the correlation between Italian 10-Year yields & the EUR has now

effectively been reduced to nothing as Italian yields spike higher, indicating

that the single currency is taking Italian political uncertainty in its stride

and as markets see little threat of contagion or fallout from Rome. This lack of

correlation has resulted in FX traders having relatively little Italian headline

risk to consider outside of inconsequential intraday volatility. Nonetheless,

this may not remain the case should the MS5/Lega coalition move forward with

some of their more outlandish plans including mini-BOT issuance (paying state

debts with short-dated notes) or significantly looser fiscal policy.

- EURUSD last 1.1790, with the May 18 high (1.1822) offering next resistance.