Risk sentiment continues to simmer in Europe as the recent pan-European election exposed the fractured political landscape in Europe,
Pro-European Parties have secured two-thirds of the 751 members strong parliament, but the surge of nationalists parties have increased the risk of clashes between and Brussels and National governments. After the election, the European Commission announced that Italy would be charged €4 billion penalties should it breach the EU debt limit as the Nationalist government plan to increase the deficit to boost domestic demand. In France, President Macron’s ‘En Marche’ came second to nationalist Marine Le Penn’s ‘Rally Nationale’. Though nationalists ultimately lost the day, they won important battles in Italy, Hungary, France, Germany, and in the United Kingdom, where Brexiteer Nigel Farage’s Brexit Party won the majority of the seats.
Economic development in the Eurozone is also working against the euro as slowdown has become more prominent in recent months, especially in the manufacturing sector amid trade tensions with the United States. Eurozone’s largest economy Germany is witnessing deep recession in its manufacturing sector with end yet not in sight.
While the euro struggles fundamentally, the USD remains well bid as the policies pursued by the Trump administration in the Untied States continue to suck dollar liquidity.
Trade idea:
Keep EUR/USD short with targets around 1.105, 1.102 area, and the stop loss around 1.126, and 1.132 area. The exchange rate is currently at 1.119 area
Pro-European Parties have secured two-thirds of the 751 members strong parliament, but the surge of nationalists parties have increased the risk of clashes between and Brussels and National governments. After the election, the European Commission announced that Italy would be charged €4 billion penalties should it breach the EU debt limit as the Nationalist government plan to increase the deficit to boost domestic demand. In France, President Macron’s ‘En Marche’ came second to nationalist Marine Le Penn’s ‘Rally Nationale’. Though nationalists ultimately lost the day, they won important battles in Italy, Hungary, France, Germany, and in the United Kingdom, where Brexiteer Nigel Farage’s Brexit Party won the majority of the seats.
Economic development in the Eurozone is also working against the euro as slowdown has become more prominent in recent months, especially in the manufacturing sector amid trade tensions with the United States. Eurozone’s largest economy Germany is witnessing deep recession in its manufacturing sector with end yet not in sight.
While the euro struggles fundamentally, the USD remains well bid as the policies pursued by the Trump administration in the Untied States continue to suck dollar liquidity.
Trade idea:
Keep EUR/USD short with targets around 1.105, 1.102 area, and the stop loss around 1.126, and 1.132 area. The exchange rate is currently at 1.119 area