Italian politics has lurched back into the spotlight this week. Ahead of regional elections due over the weekend and into next week, there are fresh concerns for the political situation in the country.
5SM Leader Resigns
Luigi Di Maio, the head of the populist 5 Star Movement announced that he is standing down as the party leader.
5SM, which became known for its anti-establishment message, exploded in popularity over recent years. The party gained the most support in the 2018 elections.
However, following two consecutive coalition governments, the success of the party has visibly waned. Di Maio stated that he feels “an era is coming to an end”.
Regional Italian Elections This Weekend
The northern region of Emilia-Romagna will go to the polls on Sunday.
The expectation is that right-wing nationalists will oust the current center-left leaders there, which have been in place for decades. Such a result would mark a significant shift in voter sentiment. It would also cast jeopardy over the future of the government which is currently a coalition between center-left and the 5SM.
Di Maio’s resignation speech, which he gave in front of Hadrian’s temple in Rome, was emotive.
Di Maio said the 5SM was a “visionary project never achieved before and with no equal anywhere in the world.” He went onto say that Italy needs “to have time to sort out the mess made by those in power for the past 30 years.”
5SM Support Dwindling in Polls
Di Maio’s resignation is likely well-timed. Recent opinion polls ahead of Sunday’s elections have been reflecting a deterioration in support for the 5SM leader.
The 5SM is currently third in the polls with La League currently running roughly even with the ruling Democratic party.
The Democrats have been in control there for the last 75 years. Removing them from power would, therefore, be a significant achievement. It would also be a key turning point for the league party led by Matteo Salvini.
Democrats Downplay Talks Of Crisis
Despite the shock announcement this week, the ruling democratic party is keen to downplay fears of political crisis.
Speaking with CNBC, the Italian economy minister Roberto Gualtieri said:
“Not at all, it is not a political crisis, it is not affecting neither the government — by the way, Mr. Di Maio will remain foreign (affairs) minister — nor the majority, which is actually quite broad in the Parliament.”
Salvini’s La League party, which has a firm anti-immigration stance, is on the verge of a historic result in the upcoming elections. There are fears that such a result would help bolster broader support for the party putting the future of Italian politics in question.
EURUSD has been under pressure this week. Price is currently testing the rising trend line of the corrective bear flag pattern.
A break here would open the way for a run down to deeper support at the 1.0996 and 1.0927 levels next. To negate this view, bulls will need to see price hold current support and make its way back above the 1.1166 level.