Risk assets are bouncing back after a rough holiday-shortened week in the US, with US stock indices gaining around 1% at the open to trade back at Wednesday’s levels. As my colleague Fawad Razaqzada chronicled earlier this morning, weekend progress on a Brexit deal has stabilized sentiment, though there are still plenty of hurdles to clear before a smooth transition is likely. In the FX market, last week’s “safe haven” winners (the JPY, CHF, and USD) are the three weakest major currencies so far today.

The world’s most widely-traded currency pair, EUR/USD, is particularly interesting at the start of the week. As we see it, there are three main storylines driving trade in the pair:

1) German data missed expectations

Early in European session trading, Germany released its IFO =survey. In brief, the overall reading of the business climate in the Eurozone’s largest economy dipped to 102.0, the second-lowest reading of the year. This drop was driven by both a decline in the current assessment of the economy and expectations for the future.

2) Draghi struck a cautious tone

In his just-concluded comments to the EU Parliament, ECB President Draghi noted that “the data that have become available since [his] last visit in September have been somewhat weaker than expected.” He expressed some optimism that the slowdown may be temporary but ultimately reiterated that significant stimulus was still needed and that the current uncertainties still call for patience. While it still appears likely that the ECB will wind down its asset purchases next month, the central bank may be more cautious about normalizing policy midway through next year unless economic activity recovers.

3) Italy comes to the negotiating table?

Meanwhile, in Italy, the highly contentious budget debate saw a bit conciliation over the weekend. After holding a hard line for a 2.4% budget deficit in recent weeks, Italy’s Deputy PM Matteo Salvini stated that “if there’s a budget that makes the country grow, it could be 2.2 percent or 2.6 percent.”