The euro fell today to its lowest level in six and a half months as a result of the Italian bond sell-off due to concerns about Italy's growing political uncertainty following the appointment of a former IMF official as interim prime minister until new elections.
Carlo Cottarelli, the interim prime minister, said the elections would be held early next year and could be held next August if he did not get the confidence from the parliament and was due to submit a list of cabinet ministers today.
The EURUSD dropped below 1.16 for the first time in six and a half months at 1.1502 levels, and 1.15 levels are a strong support level that could push the pair higher again. So far, the euro has fallen about 4% on monthly basis, its biggest monthly decline in 3 years.
Italy's two-year bond yields rose to 1.42 percent after hitting 1.70 percent earlier, its highest level since 2013.
On the other hand, as US bond yields fell, the US dollar fell to a 5-week low against the JPY at 108.42, while the dollar index rose to a six-and-a-half-month high of 94.70.
