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German-Italian yield spread widens further today after EU finally confronted Italy on its budget. A letter was passed to Italian Economy Minister Givoanni Tria, detailing why the budget is an "obvious significant deviation" of the recommendations adopted by the European Council under the 2019 Stability and Growth Pact. Italy will now have until October 22 to respond to the letter. But it's unlikely for the populist coalition to back down.

At the time of writing, Italian 10 year yield is up 0.075 at 3.753.

On the other hand, German 10 year yield is down -0.016 at 0.405. That is, German-Italian yield spread is now at 334!.

Euro is just mixed for today, even though it's the second weakest for the week after Sterling.

Pivot (invalidation): 112.10

Our preference Long positions above 112.10 with targets at 112.60 & 112.75 in extension.

Alternative scenario Below 112.10 look for further downside with 111.95 & 111.70 as targets.

Comment The RSI calls for a new upleg.

Pivot (invalidation): 1.3065

Our preference Short positions below 1.3065 with targets at 1.3000 & 1.2970 in extension.

Alternative scenario Above 1.3065 look for further upside with 1.3100 & 1.3130 as targets.

Comment The break below 1.3065 is a negative signal that has opened a path to 1.3000.

Pivot (invalidation): 1.1485

Our preference Short positions below 1.1485 with targets at 1.1445 & 1.1425 in extension.

Alternative scenario Above 1.1485 look for further upside with 1.1505 & 1.1530 as targets.

Comment The break below 1.1485 is a negative signal that has opened a path to 1.1445.

Pivot (invalidation): 5.5810

Our preference Long positions above 5.5810 with targets at 5.6950 & 5.7700 in extension.

Alternative scenario Below 5.5810 look for further downside with 5.5280 & 5.4940 as targets.

Comment The break above 5.5810 is a positive signal that has opened a path to 5.6950.

Pivot (invalidation): 0.7115

Our preference Short positions below 0.7115 with targets at 0.7090 & 0.7075 in extension.

Alternative scenario Above 0.7115 look for further upside with 0.7130 & 0.7150 as targets.

Comment As Long as the resistance at 0.7115 is not surpassed, the risk of the break below 0.7090 remains high.

Pivot (invalidation): 1.3050

Our preference Long positions above 1.3050 with targets at 1.3090 & 1.3115 in extension.

Alternative scenario Below 1.3050 look for further downside with 1.3020 & 1.3000 as targets.

Comment A support base at 1.3050 has formed and has allowed for a temporary stabilisation.

Pivot (invalidation): 0.9940

Our preference Long positions above 0.9940 with targets at 0.9975 & 1.0000 in extension.

Alternative scenario Below 0.9940 look for further downside with 0.9915 & 0.9900 as targets.

Comment Technically the RSI is above its neutrality area at 50.

Pivot (invalidation): 2785.00

Our preference Short positions below 2785.00 with targets at 2749.00 & 2709.75 in extension.

Alternative scenario Above 2785.00 look for further upside with 2818.00 & 2846.75 as targets.

Comment The RSI is bearish and calls for further decline.

Pivot (invalidation): 11720.00

Our preference Short positions below 11720.00 with targets at 11460.00 & 11390.00 in extension.

Alternative scenario Above 11720.00 look for further upside with 11790.00 & 11850.00 as targets.

Comment The RSI shows downside momentum.