FXstreet.com (Barcelona) - The DXY was boosted by the Italian crisis and resulting euro weakness. The nervousness was severe enough to offset greenback weakness stemming from the down-to-the-wire budget battle in the US.

Will any data points matter at all as long as the Italian and US governments have the stage?

The major euro weakness stemming from the rumored collapse of Berlusconi’s government in Italy shows that no matter what the powers-that-be in Europe do, sometimes there is no avoiding crises. The weakness Sunday night is weighing down the DXY even though the US Government has major concerns of its own.

The DXY, in addition to government concerns in Italy and the US, will be reacting to varying degrees to Chinese PMI, Japanese housing data, German retail sales, EU consumer prices, Canadian GDP and Chicago PMI.

Technical outlook for DXY

Technicians say the DXY’s upside correction that started mid-morning in the US session and that is ongoing may take the DXY up to 80.45. Once the short-term ceiling has been established / tested, the next move lower will likely reach 79.93 with the next level of 79.62 just below that.