The EURUSD extends its slide on Friday after sharp losses yesterday, as traders are digesting the developments in Italy. The government approved a controversial budget, which aims for a deficit of 2.4% of GDP in 2019.The markets expected that the deficit would be below 2%, in line with EU rules. Moreover, the number may get even higher as the budget is debated in parliament.
In addition to this, we see a widespread rally in the greenback after a “hawkish” Fed’s rhetoric during the meeting this week. Meanwhile, fresh economic numbers added to the gloomy picture around the single currency. After Germany's positive CPI readings yesterday, traders were disappointed as the Euro zone core inflation fell back below 1.0%, down to 0.9% мы 1.1% expected.
On Monday, the pair climbed above 1.18 for the first time since mid-June, while at the end of the week the price has slipped below 1.16 and registered a two-week low at 1.1570. In the absence of corrective technical signals and positive fundamental drivers, EURUSD could target the 1.15 handle, especially as the EU officials express concerns over Italy’s budget plans.