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The election to the European Parliament was held over the weekend and the general trend has been a shift towards so-called “populist” parties across the continent.  

In the UK – the Brexit Party, led by arch EU critic Nigel Farage swept the board, leaving the Tories and Labour party way behind in the wake of the never-ending Brexit fiasco. A similar result was seen in France, where Marine Le Pen’s Rassemblement National (RN) claimed a stunning victory against Emannuel Macron’s Renaissance alliance.  

In Italy, Matteo Salvini’s Lega party is set to come out on the top, winning about 30-35% of the vote. The centre-left Democratic Party should come in the second place ahead of Salvini’s coalition government partner – Five Star Movement, a sharp contrast to the general election results seen last year  

Meanwhile, the market reaction, so far, had been limited as a success for Euro-skeptic parties was offset by a decline in the share of seats held by the biggest blocs. Official projections showed Center-right and centre-left blocs lost their shared majority, but surges by the Greens and liberals meant parties committed to strengthening the union held on to two-thirds of seats.

The EUR/USD pair ticked higher to 1.1215 but failed to capitalize on the move and slipped back below the 1.1200 handle amid holiday-thinned   liquidity conditions, albeit held well above a two-year low level of 1.1107 touched last Tuesday.