Euro dips after Catalan vote

The Euro sharply depreciated against the Dollar during early trading on Friday after pro-independence parties in Catalonia triumphed in Thursday’s regional elections.

With three pro-independence parties winning a combined 70 seats of the 135 available, concerns are once again heightened that tensions between Barcelona and Madrid could escalate.

Although political uncertainty in Spain has the ability to punish the Euro short-term, losses are likely to be limited by the growing optimism over Europe’s economic recovery.

Taking a look at the technical picture, the EURUSD remains supported above 1.1850 on the daily charts. Prices are trading above the 50 SMA while the MACD has also crossed to the upside. A weekly close above 1.1850 could signal a further incline towards 1.1920 and higher. Alternatively, a failure of prices to keep above the 1.1850 pivotal level may reopen a path back towards 1.1730.

Lukman Otunuga, is a Research Analyst at FXTM