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Political Uncertainty in Germany Could Impact EUR

EUR-USD rose on Friday due to losses associated with USD. However, the pairing could still fall as EMAs start to trend south. Both the 14-day relative strength index and MACD remain in line with investors that remain sceptical.

Political Uncertainty in Germany Could Impact EUR

The pressure on EUR has been attributed to the loss of support German Chancellor Merkel lost. The lack of support could be due to in-house conflict.

The reason why the lack of confidence impairs the value of EUR is due to the ongoing Brexit negotiations. What has been considered weakness could be portrayed as a lock of professionalism when it comes to dealing with the Italian budget crisis.

The pairing has been backed up courtesy of a risk aversion, which looks to counteract the increase of rates by the Fed.

Italy Credit Rating Remains Unchanged

In some circumstances, the value of an unchanged credit rating would be low when trying to determine the value of currency pairings, but given how much impact recent news is having, it’s not surprising that among the current news, an unchanged credit rating seems to be having a positive effect, albeit brief.

Despite S&P reporting the unchanged credit rating for Italy, there is still a negative outlook. The government have stated that there could be reassessment surrounding the latest budget that was put forward.

New Italian Coalition Government Could be Detrimental for Eurozone

A coalition government is something that happens to make up the numbers, but this doesn’t always mean they’re a good fit. If the members of a coalition government have a similar outlook, then it can be beneficial to the economy and eurozone overall.

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However, sceptics fear that the latest coalition is one that could spell disaster for the eurozone, given that one half of the wing is made of Marine Le Pen, who is looking to deport half a million migrants over the next year.

Meanwhile, the other wing consists of people who are against vaccines.

Much Like Brexit and trade deals in the US, there are ongoing decisions being made which will go on to impact the value of the EUR, and there’s not likely to be much movement until it is determined as to what actions will be taken.

Moves in other countries within the eurozone can often do a lot to increase the value of the pairing but given how much uncertainty there is in relation to the global economy at present, it stands to reason that people are more sceptical, and will often predict the worst-case scenario so investors are able to make safeguards where possible.

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