Germany’s interior minister said that good progress has been made towards an agreement with Italy, regarding the migration issue. It happened after Italy threatened to veto the EU budget. Earlier this month, there were agreements with Spain and Greece, and we can expect to see maybe similar agreement with Italy too! Also, there is possible progress to ease tensions within the EU, especially with Italy.
EUR/USD rose breaking the 1.1675 resistance line and continued to struggle with the level (Asian session). As the upward trend-line remains intact we maintain our bullish bias, however bearish tendencies and some corrections may occur as the US dollar strengthens due to the developments on the NAFTA issue.
We could see it breaking the 1.1675 resistance line and aim for the 1.1740 resistance level. On the other side, if the pair come under selling interest we could see it reaching out or even break the 1.1623 support line.
In other headlines, Italy’s parties M5S and Lega, seem to surge to power, ending Italy’s political drama for the past months. The PM candidate, Giuseppe Conte is expected to be sworn in today by president Mattarella according to media reports. The new government could challenge Eurozone fiscal rules, should it follow the program agreed by the two parties. The new cabinet will face a vote of confidence by the two houses of parliament, on Monday and on Tuesday. At the current stage, any new headlines about the stabilization in Italy and the Eurozone, could support the EUR.
EUR/USD traded in a sideways manner with some bullish tendencies yesterday, breaking the downward trend-line incepted since the 20th of April and testing the 1.1715 resistance line. We see the case for the pair to trade in a sideways manner however with some bearish tendencies as the USD side could strengthen at the release of the US employment report. Should the pair come under selling interest we could see it breaking the 1.1640 support line and aim for the 1.1550 support barrier. If the pair finds buying orders along its path we could see it breaking the 1.1715 resistance line and aim for the 1.1620 resistance hurdle.
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.