The Euro earlier struck a 6-week trough after an Italian official claimed that the resolution to Italy's problems would be to abandon the Euro. Those comments were the trigger for a broader market sell-off of the Euro against the US Dollar, as well as the safe haven currencies. Analysts say that any developments within Italy's political parties tends to influence sentiment, especially after the recent proposal of an unexpectedly higher deficit target.
As reported at 11:22 am (BST) in London, the EUR/USD was trading lower at $1.15, down 0.51%; the pair has ranged from $1.15053 to $1.158. The EUR/JPY was trading at 131.023 Yen, a loss of 0.71%, while the EUR/CHF was trading at 1.13323 Swiss Francs, down 0.46%.
Italian Government Defiant of Criticisms
The comments came from the League Party's Claudio Borghi, the economic chief, who said that Italy would likely have more favorable economic conditions with a sovereign currency. While he did later backtrack on those comments, saying that Italy wasn't planning to leave the EU, the damage had already been done. EU officials had spoken negatively about Italy's budget which impacted sentiment for the Euro, a move which was criticized by the Deputy Prime Minister for Italy. Luigi Di Maio also said that the government has no plans to revise the deficit targets; analysts fear that a credit ratings agency downgrade of Italy's sovereign debt could be the unintended outcome.