Following the six-and-a-half-month downfall, the Euro has advanced against the Dollar, rising 0.55% at $1.1602.
The Euro has also done well compared to the Pound Sterling, up 0.40% at £0.8737 and the EUR/USD pair shone briefly at 1.16 before slipping back down to 1.1585.
Even though fears surrounding the political upheaval have eased, the spot has failed to withstand the surge above 1.1600 due to traders being wary of the risks of another election in Italy, which could result in a sturdier mandate to the Eurosceptic parties.
With Italy making slow progress towards forming a government, yesterday, there was a fall in stocks and bonds which resulted in investors relocating their money from Europe to US government bonds.
On Tuesday, there was a drop of more than 2% in Italian stocks, and a fall of roughly 1% in Europe and US stocks.
Although investors had anticipated a “big investment boom” in the US, it hasn’t occurred yet and with businesses spending more money on equipment and machinery, it is making a slow but sure start.
With the economy predicted to expand around 3%, this could be a benefit for the economy. However, there is a risk of an interest rate hike earlier than expected due to high inflation.
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