Italy is on the brink of another political crisis. Prime Minister Draghi submitted resignation from the post last week amid lack of support within the coalition. However, Italian President Mattarella did not accept Draghi's resignation and instead asked him to look for a majority that would support him. While the technocratic government of Mario Draghi was supported by most parties in the Italian parliament, maintaining it may not be an easy task. Five Star Movement refused to give Draghi a blank check to govern while Forza Italian and League signaled over the weekend that they are ready to leave the government.
However, Mario Draghi still seems to believe as he said during a speech in the Senate today that his governing coalition can be rebuilt. Another confidence vote in his government will be held this evening at 6:00 pm BST. A breakdown of Draghi's cabinet would be negative as it would most likely lead to snap elections, boosting uncertainty for investors in Italian assets. It would also be negative for the euro.
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Open account Try demo Download mobile app Download mobile appTaking a look at FTSE MIB (ITA40) index at D1 interval, we can see that the index has been trading in a downward move since the beginning of the year. Index reached a 20-month low last week, just slightly above the psychological 20,000 pts mark. Market started to recover as moods on the global markets improved and news from Italy hinted that snap elections and political chaos may be avoided. A near-term resistance zone can be found in the 22,700 pts area while a key resistance is marked with the upper limit of the Overbalance structure at 23,935 pts.
Source: xStation5
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