In early trading today, the dollar held strong against the euro, which hovered around a two-week low, as slightly higher Treasury yields boosted the dollar.

The euro hit $1.1079, testing last week’s low of $1.1066.

A testing time in the Italian parliament today, as Prime Minister Giuseppe Conte is expected to resign ahead of a no-confidence vote that was called by far-right Lega party. However, there is widespread uncertainty over how the political turmoil will come to an end.

President Sergio Mattarella could request the parties in parliament to form a new government or otherwise snap elections could take place.

For the first time in a decade, Germany also faces the stark possibility of a recession following warnings in a report published yesterday that it expects a second straight quarter of contraction in the summer, thereby putting the euro zone’s traditional engine room in the red.

Meanwhile, the euro has strengthened against GBP after Prime Minister Boris Johnson made new waves by proposing to the European Council President that the Irish backstop should be replaced.

In an open letter to Donald Tusk, Johnson reiterated the need to diverge from the EU’s regulatory standards in the long term.

GBP was at 1.0927 against the euro, down 0.3% from last night. Meanwhile, the dollar index was up less than 0.1% at 98.257.

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