Against the background of an almost empty economic calendar, traders of the euro-dollar pair focused on Italy, whose authorities can not find a compromise with Brussels on the issue of the national budget. The information hype around this problem is somewhat contradictory, so the EUR/USD pair managed to reach the middle of the 15th figure on Monday and roll back, almost to the opening price.
The thing is that today many European politicians and "first-tier" officials voiced their opinion on the Italian issue, and the positions of some of them contradict each other. In particular, European Commissioner Pierre Moscovici said that Brussels does not intend to bring the situation to a relationship crisis, but now "the ball is on the side of Rome". Representatives of the ECB also called for a dialogue, noting that there are no reasons for panic (regarding the fate of bank deposits) – as there are no signs of a systemic crisis. In addition, Moody's has revised the credit rating of Italy, reducing it by one point – from "Baa2" to "Baa3". In itself, this is an unpleasant fact, but traders drew attention to the fact that Moody's raised the country's forecast to "stable" – this nuance offset fears that Italy will fall to the "junk level" rating.
But the list of positive signals has exhausted itself. The fact that the Italian market considers a broader view of budget relations. According to recent sociological studies, anti-European sentiments are growing in Italy, if early parliamentary elections are held in the near future, then eurosceptics will exceed their previous result - according to some polls, they will receive about 55-60% of the vote.
According to experts, the situation with the budget only exacerbates this trend, because several local media actually accuse Brussels of" tyranny", as the EU does not allow inflating the budget. Indeed, if Rome makes concessions and reduces the budget deficit to 0.8% (which is unlikely), many initiatives of the authorities will not be implemented (and this is the social programs for the poor, and reducing the tax burden, and the growth of pensions, etc.). In this case, the popularity of anti-European political forces will only increase, which will affect the results of the next (or extraordinary) elections. Greece has already gone through a similar path: on the wave of anti-European protests, SYRIZA came to power, which previously had a rating at the level of statistical error. In the re-election Tsipras confirmed its popularity-moreover, even the far-right (neo-Nazi bias) party "Golden dawn" gained almost 7 percent of the vote, received 18 seats in Parliament.
In other words, if anti-European sentiment among the Italians continues to grow, the question of "Italexit" may again become relevant, although the current government assures Brussels that Rome does not have such intentions. However, the coalition structure of the current cabinet is too unstable, and the composition of the government in Italy are changing with enviable frequency (in the last 5 years the country managed to guide four prime ministers). Therefore, Italy can become another hotbed of "political separatism", shaking the unity of the Alliance.
In addition to such bleak political prospects, there is also a financial background of the problem. The European press is now exaggerating unofficial information that the ECB will not "save" Italy in case of lack of liquidity – only if there is an appropriate program of assistance from the EU. Such a programme is coordinated with Brussels and usually involves spending cuts, tax increases and unpopular economic reforms. Here again, you can recall Greece, which is "squeaking", but still agreed to fulfill the necessary conditions. Official Rome, in turn, rejects this scenario in advance. Therefore, the political crisis of relations between Italy and the EU will quickly grow into an economic one, especially if the cost of servicing the Italian public debt becomes too high. In this case, a default is possible, which will provoke a "domino effect" not only within the Italian economy, but also in the economy of the eurozone as a whole.
Thus, the aggravation of the Italian crisis carries great risks, and this factor exerts strong pressure on the euro. Against the background of a half-empty economic calendar, this problem has become the number 1 topic for traders who are forced to follow newspaper headlines. According to the available information, the parties can sit down at the negotiating table in the coming days, although both Rome and Brussels publicly take categorical positions. But the consequences of the crisis are too unpredictable (especially taking into account Brexit), so the outcome of the bilateral dialogue can lead to a certain result.
The dynamics of today's trading suggests that in case a compromise is reached, the euro will show strong growth, whereas until this point the currency will be under the same strong pressure. Technically, the pair is between the middle and lower lines of the Bollinger Bands indicator on the daily chart, and the Ichimoku Kinko Hyo indicator shows a bearish "Parade of lines" signal. This combination of indicators allows the price to drop to the bottom of the 14th figure, that is, to the resistance level that corresponds to the lower line of the Bollinger Bands. The bulls of the pair, in turn, need to overcome the mark of 1.1620 in order to level the development of the downward scenario.
