This year will be a turning point for the European Union and its shared currency, the Euro. In the first half of 2017, the Netherlands, France, and Germany will hold crucial elections. These votes may harken to either a bright future or a dissolution of the union over headwinds in Greece and populist movements all over the West. The Eurozone has several key challenges going forward.
1. Italy
Almost half of the Italian electorate supports political factions expressing Eurosceptic views, and several members of Italy's center-left have formed a new party - splitting the establishment's base of support against the far right 'Five Star Movement.' Italy is not expected to vote against the Euro any time soon, but a growing right wing raises the possibility of a snowball effect if another country leaves first.
2. Greece
Greece continues to struggle with austerity and a dismal economy. The Greek people may be unwilling to give up more of their pensions and other hot-button issues. A push to leave Europe may come from the Greek electorate, and this would wreak havoc on the stability of the shared currency.
3. France
France presents the greatest danger to the Euro going forward. Right-wing French leader Le Pen takes a hard line against the shared currency and pledges to put France first. She has a real chance of winning, and her victory could be a death blow to the monetary union.
Conclusion
The European economic and monetary unions face several significant political headwinds for 2017, and these issues are likely to keep the currency suppressed until they are resolved favorably (for the union). If any of these key votes go against the Euro, the market reaction will be monumental. Investors can hedge geopolitical uncertainty with precious metals.
