Italian Mud Sticking to Euro Seen Dragging It Down to $1.10
- Sentiment on the common currency turning, Standard Bank says
- Risk reversals favor further weakness in the short-term
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The euro’s five-quarter rally is being impeded by a five-letter word: Italy.
As the wind was knocked out of Italian bonds Wednesday on concern that the two populist political parties struggling to form an administration would seek a government debt writedown, the common currency slid to the weakest level this year. That may only be the beginning, according to Standard Bank.