Euro gaining sharply as Italian budget report soothing, local political reaction to be eyed
- News of Italian Budgetary restrain is on the market, Euro gaining sharply after a slight downfall following new NAFTA deal
- Rome is still intended to reduce the budget deficit
- Italian Domestic Political reaction should be noticed for future forecast.
- GBP going upwind, as possibility of a Brexit deal looks greener than ever before
Euro gaining sharply as Italian Budget report soothing
The Euro got a peculiar boost in the Asia Pacific trading hour Tuesday (10.02.2018). It was basically a reaction to the report that Italy was planning to cut down the budget deficits. As it was anticipated that the budget issue would be resolved and Euro would be getting back to the green zone, it was happened yesterday and while preparing this report, Euro was being traded at 1.1576. Also, we are expecting strong bullish momentum to surpass the last week’s closing 1.1606 pretty soon, as an Italian Cabinet meeting said that a draft plan was proposed for cutting down the deficits to 2% of Gross Domestic Product in 2021. The government forecasted a deficit of 2.4% in 2019 and 2.2% in 2020. Yet, lots of local political leaders were arguing that leaving Euro would have solved the problem completely and it is important to have a close eye toward the local politicians.
However, the deficit reduction was performed under pressure of European Union and just after releasing the report, we have found a sharp U-turn in the positive direction for Euro. Here is how Eur/USD is positioning.
EUR/USD 2-hourly chart (Present)
EUR/USD daily chart (October 2017-October 2018)
As it is much anticipated that the budget deficits would be reduced and the political turmoil would be vanished soon enough, we are expecting that Euro might look forward to recover the loss of last week and a break above 1.1720 seems to be quite likely to happen.
On the contrary, if further ignorance from the Italian local politicians have been continued and they could have a profuse impact in the recent budget turmoil, a downward move below 1.1420 is still on the card, yet, it is very unlikely to happen.
Besides, as Euro is gaining rapidly, GBP is following the trend as well. The Brexit headlines look more alive and a deal is truly in the card, as UK has agreed with the Irish government regarding the border issue to make the Brexit deal happen. At this moment, GBP is trading just above 1.3005 and a break above 1.3050 is very likely to happen, as USD started to lose the “USMCA-bought-ground”.
Read more about Brexit 2nd Referendum here.
Disclaimer: The content of this article is personal opinion and should not be considered as investment advice or suggestion towards any trading activity.