EUR/USD Price Forecast: Italian 2019 Budget Finally Approved
- The Italian parliament managed to push through the revised budget for 2019 over the weekend.
- EUR/USD grinding higher, but must breakdown supply zone heading into 1.1500, for greater upside.
EUR/USD has been edging higher since the open on Sunday evening. This being partially thanks to some relief surrounding the Italian budget saga. The Euro has certainly been victim of this huge drama and stand-off between the Italian government and the EU. However, over the weekend a positive development to now note.
Italian Parliament Passes Revised 2019 Budget
The Italian parliament finally approved a revised budget for 2019, after a total mess and initial lack of progression. This follows on from last week’s deal with the EU, with Italy narrowly avoiding fines and sanctions on the country.
In terms of the deal made with the European Commission, Italy needed to lower its planned budget deficit down to 2.04% of GDP from the original 2.4%. However, this was less of a reduction than the European officials had hoped for.
Just back in October, the European Commission had raised many red flags regarding the sheer impact of high spending on the Italian debt levels. Italy was strongly advised to revise its budget, or they would face disciplinary action.
Referring to the vote, this was scraped through in its passing, very much within the eleventh hour. Despite managing to get this passed in parliament, concerns are still highlighted with the Italian government. There remains a sense of the alliance being split and at risk of further falling apart in 2019.
Last week the Italian 10-year bond yield managed to fall to its lowest level since July 2018. At the time of writing, this is hovering around 2.72%. It is worth noting back in October, when concerns were very heightened around the budget, the 10-year yield spiked to the highest since Jan 2014.
Technical Review – EUR/USD
EUR/USD has pushed north and closed in the green over the past three trading sessions. The pair has moved from 1.1350 up to current levels at the time of writing, 1.1455. Over the near-term there are two key factors to be aware of with respect to the greenback; U.S Government shutdown and U.S – China trade talks.
Looking to the upside, the price is trading within proximity to a known area of supply. This can be seen heading into the 1.1500 territory, of which EUR/USD has not been above since 22nd October. Since, the bulls have faltered within this zone on each occasion, it can be seen from 1.1460-1.1500. A break and close above will be the key to greater upside.
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