Italian Politics Threaten To Disrupt The Fragile Eurozone Recovery

The euro traded just below $1.33 on Monday morning after promising economic data showed a glimmer of hope that the region was on its way out of its longest ever recession. For the first time since January of 2012 the bloc produced a PMI score above the 50 point threshold that indicates growth. Retail sales were also on the rise and investor confidence seems to be slowly returning. Last week's European Central Bank meeting brought about no new changes and in spite of improved PMI data, the bank renewed its promise to continue with accommodative policy until the eurozone economy could stand on its own two feet.

Now, the region's biggest concern is fanning these few sparks to produce a full blown recovery and return to growth. The bloc is still facing several large issues, with unemployment at the forefront. Eurozone unemployment still stands at a staggering 12.1 percent, with more than double that figure being reported in southern countries that have received bailouts. With such high unemployment, several eurozone members are quite vulnerable to political and social uncertainty which is a concern for the entire region. At the moment, Italy's fragile coalition is under the microscope after ex Prime Minister Silvio Berlusconi bitterly protested being found guilty of tax fraud on Sunday.

reported that despite being denied a pardon by Giorgio Napolitano, Berlusconi announced that he was committed to the current Italian government and that he was not considering pushing snap elections as many of his supporters were calling for. Instead, many were surprised that the usually outspoken Berlusconi came across as calm and respectful.