EUR fails again, heads for interim support
The Euro (EURUSD) had a reasonable crack at the 1.1800 resistance level in recent days, but has succumbed to altitude sickness yet again and is currently trading around 1.1580. We’d expect to see some interim support between here and the next 50 points lower, but the main drivers for the downward move are political, not economic. The Italian stock market is having a torrid time and this is at least partly due to the culture clash between the EU and the elected Italian government. The Italian government has set a 2.4% budget deficit in defiance of demands from Brussels, and they are unlikely to back down given that they were placed in power precisely because the electorate is fed up with EU interference. The Italians also find themselves in fundamental disagreement with the EU over the migrant issue, with so many of them being ferried to Italian ports after being ‘rescued’ by NGO vessels, and it’s not difficult to imagine Italy looking at Brexit with an envious gaze and one eye on the possibility of joining the UK outside the EU. Italy has always been one of the least politically stable of the European countries and had 61 Governments in the 72 years since the end of WW2. In fact, Silvio Berlusconi has actually been a stabilising influence on Italian politics, and who thought that was possible ?