The European Union has taken the first step towards imposing fines on Italy after the rejection of the draft budget and explaining that the expenses of the populist government violate the fiscal rules of the united bloc. At the same time, Deputy Prime Minister Mateo Salvini confirmed that he is ready to accept small budget changes, but his main elements - promised to voters - are not negotiable. In reaction to the latest news from Brussels, the euro exchange rate strengthens during the afternoon trade.

The European Commission has rejected an amended draft of the Italian budget explaining that the document seriously violates EU rules. Representatives of the Commission have already announced that an excessive deficit procedure will be launched for the country. Nevertheless, the Italian government maintains its previous position and does not want to change the budget assumptions regarding debt. According to Valdis Dombrovskis, vice-president of the European Commission, Italy's budget plans for 2019 carry the risk of local destabilization, and hence the European market. The EU fiscal rules clearly state that members of the monetary bloc must keep a budget deficit below 3% of total GDP and debt below 60% of GDP. Countries whose debt exceeds the aforementioned value are forced to implement corrective measures to reduce the adverse balance while maintaining a satisfactory pace. At this point, Rome's debt is twice as big as the EU permits and, according to Brussels officials, it does not melt quickly enough.a

Let's now take a look at the EUR/USD technical picture at the H4 time frame after the decision was made. The market has bounced from the level of 1.1359 and now is heading towards the level of 1.1456 as the momentum is still positive nad quite strong. Please notcie the golden trend line has not been violated, wich indicates that bulls are still in control over this market.Larger time frame trend, however, remains bearish.