EUR/USD recovery capped under 1.1600, drops back to 1.1550

• Euro remains under pressure amid risk aversion triggered by Italian politics.
• EUR/USD recovery ends below 1.1600 and retreats to 1.1550.

The EUR/USD pair rose to 1.1589 after the beginning of the US session. The recovery was short-lived and it was moving toward daily lows. The euro was back under 1.1550 still under pressure.

The common currency was the worst performer among majors, weakened by the Italian political crisis. The last headline was that Carlos Cottarelli left the Presidential Palace. He is the new PM candidate of President Mattarella.

European equity markets dropped sharply today with main indexes down more than 1.5% on average while Italian bond yields soared. The risk aversion environment affected the euro and favored the US Dollar and the yen. After a brief pause, the negative tone re-emerged in Wall Steet. The DOW JONES was at fresh lows, down 1.24% at the lowest since May 9.

EUR/USD levels to watch

The recovery of the pair was capped below the 20-hour moving average (1.1590) and it dropped back below 1.1550. To the downside, immediate support might be seen at 1.1530 before the daily low at 1.1505/10 and 1.1475.

On the upside, the immediate resistance could be located at 1.1590 followed by 1.1640 (May 29 high) and 1.1670/75.