Euro Rises After Political Uncertainty Retreats in Europe

March 5, 2018 Share Print 0

The euro edged higher on Monday after a short-lived sell-off tied to Italy’s inconclusive weekend election, helped by the creation of a coalition government in Germany that eased political uncertainty there.

Italy’s election, which pointed to prolonged political jitters after right-wing and eurosceptic parties did better than expected, was somewhat balanced by Germany’s Social Democrats agreeing to join with Chancellor Angela Merkel’s conservatives, ending a period of uncertainty in Europe’s biggest economy.

Taken together, the election outcomes did not to alter investors’ view on the strength of the euro zone economy, although the Italian results put political risks in the region back on the radar.

“All in all, they are neutral to slightly positive for the euro,” said Nick Bennenbroek, head of currency strategy at Wells Fargo Securities in New York.

Bennenbroek and other analysts said traders will turn their focus to four major central bank meetings this week as well as the U.S. payrolls report due Friday.

The Reserve Bank of Australia will meet on Tuesday, while the Bank of Canada will hold a policy meeting on Wednesday. European Central Bank policymakers will convene on Thursday, while their counterparts at the Bank of Japan will meet on Friday.

The euro EUR= was last up 0.09 percent to $1.2328.

via Reuters

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Alfonso Esparza

Senior Currency Analyst at Market Pulse

Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.