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Forex and Support for the Euro Zone
Leaders of the twenty most prosperous nations are meeting in Mexico for the G20 summit. Forex and support for the Euro Zone are on traders’ minds as leaders hash out the Euro Zone debt dilemma. Euro Zone debt resolution has been the issue of the day for a couple of years. The alternative to dealing with the various and sundry debts of European nations and banks is a breakup or at least downsizing of the Euro Zone. Greece has been the primary concern for the last two years.
It remains a problem as the nation seems to have lost the necessary will to overcome its financial problems. Now, unfortunately, Spain is likely to need a bailout as its unemployment rate reaches twenty-five percent and investors are demanding over 7% to invest in its ten year bonds. As nations of the world pledge support for the EU traders are interested in how the Euro will perform versus other currencies. What is the trading relationship of Forex and support for the Euro Zone? Remember that much of the volatility of the Euro and other currencies in the last year or more has had to do with pronouncements regarding the Euro Zone and its debt dilemma.
Leaders in Mexico are stating their intentions to continue stimulus efforts in order to create jobs, raise tax revenues, and pay down the mammoth European debt burden. Meanwhile Forex and support for the Euro Zone are not the only issues on everyone’s mind. China recently saw its first trade deficit in a decade and the USA only slowly emerging from the recession as unemployment hovers around 8%. A valid concern is that there may well be an economic hard landing for China and the USA could enter a double dip of its recession if the US Federal Reserve lets up on stimulus measures.
Both fundamental and technical analyses are important in this situation. As the world’s two largest economies, the USA and EU, struggle to so called BRICS nations have pledged support for the International Monetary Fund. BRICS stands for Brazil, Russia, India, China, and South Africa. As the BRICS nations step up to help with funds for the IMF they are also asserting themselves more strongly than before regarding the Euro Debt crisis. Those interested in Forex and support for the Euro Zone may wish to follow the comments and actions of members of the BRICS group as well as the actions of German Chancellor, Angela Merckel, the remaining sole supporter of strict austerity measures to cure the Euro Zone debt dilemma.
Although the German Chancellor may seem to be isolated in her insistence of austerity for bailout loans she will likely not change her stance. The German voters have a certain degree of tolerance for what they may see as throwing good money after bad.