The Prime Minister of Italy Silvio Berlusconi has resigned today after more than 17 years dominating the political scene. The move comes after losing parliamentary majority and after pushing a new austerity plan designed to shrink the budget deficit from 120% of GDP (only seconded by Greece's budget deficit). Most likely, Mario Monti, a technocrat, will be appointed by President Giorgio Napolitano to lead the new government. Mario Monti, a former European Union Commissioner and pro-euro advocate will start negotiating with the major political parties later this evening. The pattern is becoming more and more obvious: EU is pushing for less national political control in exchange for financial protection. Will this ultimately end up creating the United States or Europe or break it apart ?
Qvo vadis Euro ?
The European currency has recovered some ground after bouncing from its recent low of 1.3890 and is currently trading at 1.3755. Next week it looks like it will test the resistance level at 1.4090 and depending on the European political developments it may head further north.