ForexLive European morning wrap: it's risk-off time with euro leading the way

The forex trading headlines from the european morning session German GFK consumer climate 5.9 as expected German import price index feb m/m +0.3% vs +0.2% exp y/y -1.6% as expected French final Q4 GDP -0.3% as expected Swiss KOF indicator + 0.99 vs +1.02 exp Rumours of Italy downgrade force EURUSD through 1.2825 Italian industrial orders m/m -1.4% vs +0.4% exp  y/y -1.3% vs -15.3% prev Spanish current account jan EUR-2.64 bln vs EUR +4.87 bln prev  BOE FPC statement recommends regular stress testing for uk banks from 2014 Eurozone economic sentiment  90 vs 90.4 exp  vs 91.1 prev. business climate index march -0.86 vs 0.8 exp Italian bond auction meets target uptake but lower yields again UK final Q4 GDP unchanged at -0.3% UK final Q4 current account GBP-14.04 bln vs GBP-12.83 bln A far busier session than we've had lately with a prevailing risk-off sentiment and the euro coming under renewed pressure on Italy downgrade rumours, weaker data and on-going Cyprus  concerns. Early european trading saw an attack on the EURUSD 1.2825 barrier support only to fail and bounce back to run into sell orders at 1.2850. The next attack lower was more successful and we traded down to 1.2818 before a small rally only to finally break down through the next barrier at 1.2800 after weaker than expected eurozone economic sentiment and business climate index. Since then we've stuggled to get back above 1.2800 and posted lows 1.2773 with more buy orders lined up at 1.2750. The Pound has had mixed morning having little to suggest until weaker than expected Q4 current account data gave it a knock down and from 1.5140 we've so far been down to test reported strong buying interest between 1.5090-1.5100. Low so far 1.5101. EURGBP has seen the usual month end resiliance to the downward euro pressure with strong support at 0.8450 holding so far and giving cable added pressure lower. EURJPY has felt the pressure too and so far posted 120.26 lows from highs of 121.88 providing the usual knock-on effect to USDJPY which is still feeling the pressure of year-end selling. With EURCHF coming lower to 1.2173 we've seen USDCHF forced up to 0.9535 while a fund name seller of AUDUSD at 1.0465 gave that pair a shunt down to test support at 1.0430.  The firmer USD has also seen USDCAD higher at 1.0197 from 1.0159 lows as the risk-off sentiment casts its wider net. Market remains nervous but there doesn't seem much out there at the moment to give traders a more positive vibe.