Tensions in Italy do not leave the political scene - yesterday's events caused that the country again returned to the path of uncertainty. President Sergio Mattarella expressed his opposition to the proposal of the new Prime Minister, Giuseppe Conte, to appoint the Paolo Savon to the post of finance minister. As a result of the inability to establish another government, the new prime minister has already given up his mandate, and the president has called on former executive director of the IMF Carlo Cottarelli, who is assumed to be heading the technical government. In the autumn, early parliamentary elections are planned.
The leader of the Five Stars Movement, Luigi Di Maio, condemns the veto, claiming that such a decision will result in the interference of Germany, rating agencies and financial lobbyists in Italy's internal affairs. Di Maio threatens the president with impeachment because, by applying the veto law, he violated the Italian Constitution. The president defends his decision, stating that the Eurosceptic nomination as finance minister will exert an additional and unnecessary risk on the Italian economy. Investors seem to be of similar opinion. With the failure of shaping the populist government, the spread between Italian and German tenths is narrowing - 195 basis points to 215 still on Friday.
Let's now take a look at the EUR/USD technical picture at the H1 time frame. A common currency is under another political pressure on the peripheries of Euroland: the future of M. Rajoy as the prime minister of Spain hung by a thread as the parliament began the procedure of a vote of no confidence in his government. EUR/USD falls at Friday's bottom and tests 1.1644 in oversold market conditions. In a case of a further breakout lower, the next target is seen at the level of 1.1545. The nearest resistnace is seen at the level of 1.1733.
