EURUSD slides look solid. The recent European Union Parliamentary election does not help as far-right parties surprisingly won voters' confidence.

EURUSD slides look solid as market is waiting for Mario Draghi speeches and ECB decision in June. The recent Europe Parliamentary election does not help as far-right parties surprisingly won voters' confidence. Although the result does not influence financial market and the Euro greatly, but the unexpected victory have swayed the region's internal stability.

Euro

 

Austerity and Unemployment

Unification of Europe under the EU's starry azure flag might be the ideal which ASEAN seeks to be, but in EU itself, dissatisfaction has abounded. Many people sees the decision to join EU as political elite's and does not mirror the will of the people. Negative attitudes stemmed from the perceived imbalance benefit in the region that being thought as particularly disadvantageous for certain country while cushioning others.

In the UK, for example, people are complaining of the country's Austerity programs that led by Conservative and Liberal Democrats coalition, while the country pays expensive contribution to the EU. Beside of that, migrants from Europe periphery is said to tighten the job market that unemployment grows. Similar critics also appear in France and German, though in smaller percentages.

Those criticism are represented by Eurosceptic far-right parties. They are generally bring promise of referendum to let people decide whether they are going to stay with the European Union or withdraw.

 

Eurosceptic Win, European Union Fail?

European Parliamentary election which was held in 22-25 May 2014 have resulted in unexpected win for parties with heavy Euroscepticism views. Surprisingly, previously minorities such as UK Independence Party (UKIP) in the UK and Front National (FN) in France votes are successfully boosted while dominant parties suffer hard losses.

The victory of right wing parties that accentuated individual countries' independency is a negative signal for further economic dan political integration among European Union. Therein lies at least two complications, that is:



1. Pro-EU Politicians Lose Confidence

Along with far-right parties winning, it proves that political elites that have been the glue that stick EU together have lost their countrymen confidence. This is a bad sign.

UKIP in the UK certainly will be fiercer in pushing the government to hold a referendum about UK withdrawal from the European Union. As well, France's FN infamously known for their opinion on tightening borders and negative views toward the Euro currency and EU-US trade agreement.



2. Increased Challenges For The Central Bank

Previously, we have mentioned that a QE-like policy from European Central Bank (ECB) will face regulation challenges because by European Union Law, ECB is not supposed to finance the government. Less conducive parliament composition and the falling support for the union among member countries might narrow ECB space to revitalize European economy.  In this circumstances, the possibility of ECB starting a Fed-like QE is smaller than putting benchmark in the minus. As analysts predicted, other alternatives such as cuts on interest rate are much more probable.

Does that mean European Union has failed and in the brink of break up? Not yet, it is too soon to say. Although the previous stability have swayed, but each country's respective parliaments dominance are still in the hands of the old pro-EUs. No drastic changes is expected in the near future. That is why the impact of the current election is unheard of. However, it is clear that EU political climates has shifted, and the result shall defend ECB's effort in depreciating the Euro.