Italy’s strongest party, 5 Star Movement could try to formulate a government, in coalition with the right wing Northern League. Media cited statements of 5SM officials which mentioned that N. League seems to get closer to 5SM positions regarding a possible income support for the poor as well as on a number of other issues. The leaders of the two parties will meet in parliament next week and there could be further developments. A possible coalition between the two parties could prove to be a headache for Brussels as their positions contradict the mainstream political lines in Brussels in a number of issues. Any further headlines about a possible coalition could weaken the EUR.
EUR/USD traded in a sideways manner yesterday with some bearish, however remained well between the 1.2495 resistance line and the 1.2355 support line. We see the case for the pair to continue to trade in a sideways manner with some bearish tones as the financial data release today could favor the USD side. Should the pair find fresh buying orders along its path, we could see the pair breaking the 1.2495 resistance line and aim for the 1.2680 resistance hurdle. Should it come under selling interest we could see it breaking the 1.2355 support line.