ForexLive European Morning Wrap – Italian Elections and Month-End Euro Demand Dominate

Continuing concerns over Italian election outcome PM Bersani to hold press conference at 16.00 gmt Berlusconi says no deal with Bersani Euro finds good support from month-end demand after early dip. eur/usd sell orders hold the rally to 1.3120 BOE MPC members attend their monthly meeting with parliamentary committee UK CBI Retail Sales survey +8 compared to expected +16 Another interesting morning as traders returned to their desks, some bloodied and bowed, following yesterday's chaos and rapid euro decline after the reality of the Italian election outcome became ever more apparent. The early part of the session understandably brought a cautious start but an attempt on 1.3000 for eur/usd was brought to an abrupt halt at 1.3018 as month-end buying flows in eur/gbp and eur/sek put the brakes under any further euro decline at that point. eur/gbp rallied to 0.8641 from 0.8580  and eur/jpy ( middle east names buying )  to 120.25 from 119.15. eur/usd stuggled to get up through sell orders around 1.3090 but then buying interest from a us investment house drove it higher to test the next big level at 1.3120 where it's held thus far. Amongst all this was the back-story of the Italian election results and where it appears that PM Bersani's centre-party have finished 4th and the comedian Beppe Grillo's 5 star party have secured 24% of the seats to become the largest single party in the lower house and second largest in the senate. Silvio Berlusconi looks to be holdng a balance of power and says he rules out any deal with Bersani, who is due to hold a press conference at 16.00 gmt. Members of the BOE's monetary policy committee have been appearing before the parliamentary Treasury Select committee for their monthly q&a session. nothing of any great note or fresh news being said and the Pound was largely unaffected until Tucker came out with "real fx rates need to be lower" comment just now and we've seen cable drop 40 tics. The only economic data of note out this morning was the UK's CBI retail sales survey at 11.00 gmt which came in under expectations at + 8 and we saw a small sell-off in gbp immediately after as a result. So Europe has picked up the baton and run a couple of laps with weary legs but we're nowhere near the finishing line just yet, and we've got Mr Bernanke testiyfing at 15.00 gmt just to throw more petrol onto the still flickering fire.