Italy on verge of government deal

Media suggest that the 5 SM and the League are on the verge of forming a government in Italy. The main positions of the parties seem to concentrate on tax cuts and social welfare spending, while there seems to be a dispute about who the actual PM candidate will be. The two parties seem to be on a collision route with Brussels and could provide uncertainty in the Euro zone if they come to power. Should there be further headlines about the programs of the two parties colliding with Brussels, we could see the EUR weakening.

EUR/USD dropped yesterday breaking the 1.1806 support line, however made up for most of the losses later on and continued to trade above it during today’s Asian morning. We see the case for the pair to continue to trade in a sideways manner with some bullish tendencies. Should the pair come under selling interest we could see it breaking the 1.1806 support line once again and aim for the 1.1715 support barrier. Should it find fresh buying orders we could see the pair reaching or even breaking the 1.1882 resistance level.