All Trade Ideas and trading scenarios found on FX360.com are hypothetical. FX360.com has not placed these Ideas in a live trading environment. Forex Trading involves high risks, with the potential for substantial losses that exceed your initial deposit and is not suitable for all persons. Past performance is not necessarily indicative of futures results.

Euro Rallies as Pan-European Proposals Emerge

Last updated 3/8/2010 3:09 AM ET (GMT -5) 4 Comments

• Share this:

Boris Schlossberg

Director of Currency Research, GFT

Greek Central Bank Governor George Provopoulos in an interview to FT Deutschland stated that Greece would be able to raise funds it needed to finance its deficit given the strength of last week’s 10 year Greek government bond auction. He also expressed confidence that financing costs would decline in the future and noted that he does not expect any further ratings downgrades from the agencies.

Neither Mr. Provopoulus nor Greek Prime Minister George Papandreou stated that Greece would need a bailout package from the EZ at large reaffirming their earlier stance that the country would be able to mend its finances on its own. Nevertheless, French President Nicholas Sarkozy offered support to  Greece over the week-end stating that the EZ stands ready with a bailout package if the country needs the union’s help.

Meanwhile, various EZ members have put forth several proposals to make structural changes that would allow the union to better deal with such problems in the future. The new policy initiatives include the formation of European Monetary Fund, to be modeled on the IMF, that would serve as a formal body to address and resolve the financing problems of its member nations. Other proposals also include the creation of pan European debt agency and a ratings service to allow all EZ members uniform access to  capital markets.

The proposals for new financing mechanisms and the overall support expressed by President Sarkozy suggests that European officials are making a concerted effort to show solidarity with Greece in particular and reaffirm  EU importance as a whole. Furthermore, by proposing the creation of pan-European institutions to better unify the region’s fiscal and monetary policies  EZ policymakers are making serious efforts to address the market’s concern over the sovereign debt problems within the region. The news bodes positively for the EUR/USD which traded to 1.3700 at the start of early European trade. As we noted last week, the Greek financial crisis appears to have crested for the time being and as confidence returns to the debt markets, the euro should begin to benefit from better investor support as a result.

The information, including Commentary and Trade Ideas, provided on FX360.com should not be relied upon as a substitute for extensive independent research which should be performed before making your investment decisions. Global Forex Trading and FX360 .com is merely providing this information for your general information. The information and opinions presented do not take into account any particular individual’s investment objectives, financial situation, or needs. All investors should obtain advice based on their unique situation before making any investment decision and should tailor the trade size and leverage of their trading to their personal risk appetite. Any projections or views of the market provided by FX360.com may not prove to be accurate.

The views of the authors and analysts are not necessarily those of Global Forex Trading, its owners, officers, agents or other employees. FX360.com and the currency research team will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained on FX360.com. Global Forex Trading and the currency research team do not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.

• Share this:

Comments (4)

FXDragon

March 08, 2010 at 04:22 AM ET

Lets join the fake rally this week. Shall we...

FXBulldog

March 08, 2010 at 04:48 AM ET

I am on FXDragon's page, these fake rally's have to tire some time soon...

schultzz.at

March 08, 2010 at 05:42 AM ET

I can't find my rose-colored euro glasses anymore, I have to resort to the dark ones. I won't join the countertrend rally. I plan to avoid the pair this week. Next week, on Tuesday, the Fed announcement may offer an opportunity to return short.
Tom Schultz.

alexjbrandt

March 08, 2010 at 05:56 AM ET

The Central Banks have been buying eur/usd around 1..3450-1.3500 and selling it around 1.3650 -1.3700, effectively keeping the pair range bound. I don't know how long this will last, but just something to take note of. If the pair breaks below 1.34 then I think we could see a move to 1.30, it it breaks above 1.37 then I think we could see 1.40.

Add Your Comment

Please login to post a comment or sign up for an FX360® account.

Loading...

About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.