The euro paired with the dollar loses the positions it won in recent days. Buyers of eur/usd could not consolidate within the 13th figure, after which the pair headed towards the main support level of 1.1220 (the lower boundary of the Kumo cloud on the daily chart, coinciding with the bottom line of the Bollinger Bands indicator). Italy, the ECB and Brexit are the three main problems of the single currency, which almost reminded us of it on the daily. Today, the news background is full of events, but almost all information campaigns are negative for the euro. At the same time, the US currency is gradually recovering: the dollar index today has returned to the 97th figure, reflecting demand for the greenback across the entire market. This time, growth of anti-risk sentiment did not hurt the greenback and dollar bulls were able to take advantage of the situation.
It is worth noting that, paired with the euro, the dollar can easily dominate, given the vulnerability of the single currency. Today, the Commissioner for Economic and Financial Affairs Pierre Moscovici reiterated that Brussels is ready to apply the disciplinary procedure against Italy, having fined it because of the growth of public debt. By and large, Moscovici made the "last China warning," but this time he added that Rome has not yet provided any real evidence of compliance with EU fiscal legislation. In turn, the Italian Finance Minister of Italy, Giovanni Tria, asked the Europeans not to rush to retaliatory measures. According to him, Rome will agree with Brussels on all controversial issues by July 9 and will convince the European Union that Italy will comply with the financial and budgetary goals set by the European Commission. According to some experts, such a long delay is related to the inconsistency within the coalition government of Italy.
According to Italian media, the coalition is on the verge of a split: members of the League and the Five Stars movement are increasingly unable to find a common language, provoking political conflicts. Things reached the point that Italian Prime Minister Giuseppe Conte threatened with resignation if the members of the coalition did not start working in tandem. But it's one thing to coordinate issues related to domestic policy, and it's quite another to develop a common position in relations with Brussels. Anti-European slogans, on the wave of which populists came to power in Italy now play against them, being a barrier to compromise solutions. In other words, the Italian problem weighs on the euro, and mutual accusations from Rome and Brussels only increase the pressure on the European currency.
News from Britain also does not bode well for the eur/usd bulls. According to the results of the first round of voting for the future leader of the Conservative Party, Boris Johnson won a crushing victory, as he received 114 points. Current British Foreign Secretary Jeremy Hunt ranked second with a significant margin: he scored only 43 votes. According to the results of the first round of voting, 7 out of 10 candidates received the necessary (minimal) support to continue their participation in the fight. Former head of the House of Commons Andrea Leeds, former Minister of Labor and Pensions Esther McVey and former Secretary of the Treasury Mark Harper dropped out of the race. They didn't get enough votes to go to the next round. The next round of voting will take place next week: then they will go in a similar format until there are only two candidates left. According to most observers, the name of the winner will be known from July 22 to 28.
However, judging by the starting position of Johnson, one can say that he continues to be the favorite of the political struggle, whereas his closest competitor, Jeremy Hunt, is significantly inferior to him in popularity among party members. By the way, Dominic Raab was previously considered the main rival of Johnson, but now the top three look like this: Johnson, Hunt, Gove. Of these, only the latter defends the position of a long delay: in his opinion, Brexit should be postponed until the end of 2020 in order to re-negotiate with Brussels on the terms of the deal. But Johnson and Raab strongly oppose a delay, while admitting the implementation of a hard Brexit. In other words, the likelihood of a "chaotic" scenario is still high, since Brussels refuses not only to change the terms of the deal, but also to discuss the deal already agreed with the EU. The single currency, as a rule, responds only to key events regarding Brexit prospects. Today's primaries once again reminded traders of the relevance of this problem, and this fact has put significant pressure on eur/usd.
From a technical point of view, the pair is in the area of the support level of 1.1280 (the upper limit of the Kumo cloud on the daily chart). If the bears push this level, the price will go to the main support level of 1.1220 (the lower boundary of the Kumo cloud on the daily chart, which coincides with the bottom line of the Bollinger Bands indicator).
