EUR/USD: Italian risks resurface

Italy is back on the agenda as focus turns towards the regional Italian election. Government stability to wobble on Salvini win.

Italy is back on the agenda for the euro after 5 Star Movement (5SM) Party Leader Di Maio announced his decision to step down earlier this week. With this coming before a decisive regional election in Emilia-Romagna on Sunday, risk premium attached to Italy could be on the rise amid concerns over the stability of the 5SM and Democratic Party (PD) coalition. Emilia-Romagna is typically a centre-left stronghold and thus the PD party would be expected to win the regional election.

However, given the sizeable lead in the national opinion polling for Salvini’s League party and with regional opinion polls showing the centre-left and centre-right are neck and neck, there is an increasingly risk that the centre-left rule could be replaced for the first time in over 70 years, which would mark a huge achievement for Salvini’s party. In turn, this would heighten concerns that Italy could be on course for another election in the near term, thus placing pressure on the euro, as well as Italian assets (FTSE MIB + BTPs).

Italian regional election opinion polling

Italian election risks to spark wider Bund/BTP spread

In recent months, foreign investors have stepped up their exposure to Italian debt, therefore rising risks that Italy could once again be heading back to the polls providing us with greater confidence. A widening of the Bund/BTP spread towards 200 basis points will see Italian assets underperform, making EUR/JPY an attractive option on the downside.

EUR/USD price chart: daily time frame


The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

Start trading forex today

Find opportunity on the world’s most-traded – and most-volatile – financial market

  • Trade spreads from just 0.6 points on EUR/USD
  • Analyse with clear, fast charts
  • Speculate wherever you are with our intuitive mobile apps

See an FX opportunity?

Try a risk-free trade in your demo account, and see whether you’re onto something.

  • Log in to your demo
  • Take your position
  • See whether your hunch pays off

See an FX opportunity?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Get spreads from just 0.6 points on popular pairs
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform

See an FX opportunity?

Don’t miss your chance. Log in to take your position.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.