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The Euro is In For Tough Times

By:
Andrew Masters
Updated: Dec 7, 2016, 08:27 UTC

The euro has continued to rebound in early Asian trading today against its US counterpart following on from yesterday’s jump and brushing aside Italy’s

The Euro is In For Tough Times

The euro has continued to rebound in early Asian trading today against its US counterpart following on from yesterday’s jump and brushing aside Italy’s referendum results which threatened to cause instability in the Eurozone as a whole.

After reaching a low in Monday’s trading of US1.054 the European currency climbed back to trade at US1.0759 on Tuesday. The pair is currently trading at 1.0718.

In a decision that rattled financial markets, the Italian population decided by a majority of 60 percent to 40 percent not to back constitutional reforms sought by Italian Prime Minister Matteo Renzi which caused him to immediately resign and led to speculation that early elections would be called.

Immediately following the news, the Euro was sold off but then reversed its losses and racked up its biggest one day gain in over 5 months as fears subsided off a snap poll which could have been called as early as 2017.

Renzi’s ruling coalition is now predicted to stay in power by leading a provisional government until the next general election in 2018 which for the time being, seems to have given the Euro a reprieve.

“It is a setback for those who want readiness for reform, those who want European countries to change. That is the only way we can deal with globalization,” said Manfred Weber, the leader of the main conservative group in the European Parliament.

Political actions are likely to drive the Euro in the nearest future with elections due in France, Germany and the Netherlands in 2017 where there is a real chance that Eurosceptic parties may come to power in at least 2 of these countries.

The triggering of article 50 expected in March by Theresa May for Britain to leave the European Union is also expected to create uncertainty in the Euro and we may not be too far away from parity with the US dollar.

This article is brought to you by FIBO Group.

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