The euro fell sharply after the Italian referendum resulted in rejection of proposed reforms and resignation of the country’s leader. Yet the currency bounced even more sharply after markets digested the news.
On Sunday, constitutional reforms proposed by Prime Minister Matteo Renzi were met with resounding “no” from voters. As he promised, Renzi announced resignation after the negative outcome of the voting.
Initially, markets reacted with panic to the news, and speculations started that Italy may follow Britain in exiting the European Union as the result of the vote was considered to be yet another example of anti-establishment sentiment in people’s minds. Yet after everything and everyone calmed down, such talks receded, and analysts started to talk that the outcome of the Italian referendum is in no way as important as the Brexit vote.
Such change of mood helped the euro to rebound. Experts say that the outcome of the referendum was priced in and the currency had been already oversold, therefore it had no much room to go further down.
EUR/USD opened at 1.0626, fell to 1.0513 (the lowest level since March 2015) intraday but bounced to 1.0734 as of 15:22 GMT today. EUR/GBP rebounded to trade at 0.8441 after opening at 0.8374 and dropping to the daily low of 0.8303. EUR/JPY climbed from the opening level of 102.64 to 123.14 (the highest since June 1) following the intraday slump to 118.91.
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