The Euro came under pressure following comments from ECB President Draghi and news that there might be an early election in Italy in September. Draghi stated that there is still need for a substantial stimulus as inflation remains subdued. Meanwhile, former Prime Minister Renzi, who is looking for a political comeback, said that he supports an election as early as September. Domestic stock markets reacted negatively, and Italian government bonds also declined.
EUR/USD fell from 1.12 to a low of 1.1120 in Asia. Immediate support is seen at 1.111, but the next important level is 1.1050.
GBP/USD is also suffering from political developments. British Prime Minister Theresa May's lead over the opposition Labour Party dropped to 6 percentage points as the latest poll showed. Following the break below 1.2820 support, a test of 1.27 seems likely in the near-term.
The commodity currencies were quiet overnight. AUD/USD consolidated in a 0.7420-40 range, while NZD/USD traded between 0.7035 and 0.7055.