Brexit and the Italian budget are again on the agenda. Hard week for euro and pound

The US dollar continued to strengthen its position against the euro and the British pound amid rising political uncertainty in the eurozone. First of all, we are talking about the unresolved problem with the Brexit agreement, as well as about the Italian budget deficit, which could develop the crisis even more.

Investors trust more to the American economy, where the publication of good economic indicators continues, which maintains the hope of market participants for a further increase in interest rates by the Federal Reserve at the end of this year, as well as at the beginning of the next.

This week is very important, as the Brexit negotiations will take place, and the next Italian budget will be submitted to the European Commission, on which will depend on the direction in which the relations between the EU and the Italian populist government will continue to develop. A number of experts believe that Italy should take the necessary actions to solve the problem with the budget deficit. This statement was made yesterday by German Finance Minister Olaf Scholz, once again calling on the Italian government to reduce the budget deficit, which they plan to increase next year.

In his opinion, high-debt countries should act more cautiously than other countries.

Returning to the Brexit topic, yesterday, a number of quite interesting statements were made by former Transport Minister Jo Johnson. He resigned last Friday, thereby showing his dissatisfaction with the actions of the current British Prime Minister. In his opinion, Theresa May hides the economic truth of the Brexit plan. Johnson is confident that May's proposal has nothing to do with what was promised to voters in the 2016 referendum when the decision was made on Brexit.

The pound today can be supported by data on changes in the number of applications for unemployment benefits. Expected less growth than last month.

Speeches by representatives of the Federal Reserve System on Monday evening supported the US dollar.

The president of the Federal Reserve Bank of San Francisco, Mary Daly, said that the economic situation indicates the advisability of a further gradual increase in interest rates in the United States, but after each increase, it is necessary to monitor the economy's response before taking the next step. At the moment, the state of the economy is very good, and there is a basic impetus to a further growth. According to the Fed representative, the committee does its job perfectly in terms of achieving maximum employment and target inflation. The labor market continues to boom, and unemployment is at a level that corresponds to full employment.

However, Daly did not say anything new, different from the statements of her colleagues.

As for the technical picture of the EUR / USD currency pair, currently, the downward movement may slow down, as the major players will try to survive the maximum from the current levels and take profits before the important political events that may happen this week. If the support level of 1.1220 is broken, the fall in risky assets will gain a new turnover, which will lead to the update of the new monthly lows of 1.1180 and 1.1120. If the upward correction gains momentum, then the euro can return to the market for new sellers in the resistance area of 1.1305 and 1.1350.