Europe got its gas, but lost Mario Draghi. The ex-head of the European Central Bank, with his authoritarian management style, scared the main Italian parties, which boycotted the vote of confidence. As a result, the country will plunge into political chaos and go to early elections in early October. An unprecedented story for Italy, given that in the autumn the parliament has to deal with the budget, and the government has to deal with a €200 billion aid package from the EU. Not everything is as smooth as we would like with the Nord Stream. Yes, it resumed work, according to the history of the shutdown, they will probably repeat themselves. In such difficult conditions, the ECB is forced to make difficult decisions. How difficult it is to be ECB President Christine Lagarde!

Of course, the political crisis in Italy ties the ECB's hands, but the elections are far away, and the growth of the yield spread of local 10-year bonds and their German counterparts to 230 bps does not create a sense of panic. In mid-June, there were 250, and the central bank was forced to announce an emergency meeting. Now it has to present an anti-fragmentation program. If it satisfies investors, and the deposit rate rises to a dizzying level of zero percent, EURUSD will have the opportunity to develop a correction to a downward trend. Otherwise, you will have to return to parity.

It is curious that the futures market in such difficult conditions continues to raise the estimated deposit rate at the end of the year.

Dynamics of the estimated ECB deposit rate by the end of July and December

In my opinion, investors' faith in accelerating the ECB's monetary restriction process has a shaky foundation. As the snap elections in Italy approach, the political chaos will intensify. Despite the resumption of the work of the Nord Stream, stories with its shutdown will be repeated. It is advantageous for Russia to maintain high gas prices, thanks to the supply of which to Europe, it earns €100 million a year. Yes, there is a reduction in exports in kind, but all this is more than compensated by the price.

Dynamics of Russian gas supplies to Europe

Thus, even if the ECB shows determination and raises the deposit rate by 50 bps, this will provide the euro with only temporary support. The situation of the eurozone economy looks too shaky. According to the International Monetary Fund, it may be threatened by a 5% recession amid the transition of the governments of the countries of the currency bloc to rationing the use of gas. It may be threatened with disintegration due to the inability of Italian politicians to compromise. All this constrains the ECB and continues to do this on the medium-term investment horizon, allowing us to assert that there can be no question of any break in the downward trend for EURUSD.

Technically, on the 4-hour chart of the main currency pair, the bears faced support in the form of moving averages and the 23.6% Fibonacci level from the 4-5 wave of the Expanding Wedge pattern. A drop below 1.015 is a reason to sell EURUSD. On the contrary, the growth of the euro above $1,023 will give an opportunity to buy it. At least for a while.