With the drama in Cyprus in its final stages, the temptation is to focus back on Italy as Bersani attempts to cobble together a government. If he fails, there will be a push for technocratic leadership but another election is more likely.
At the moment, the market isn’t showing any concern with 10-year BTP yields at the lowest since election day.
The main downside risks for the euro are slow growth, rate cuts and Italian turmoil.
