Hello koala king and folks.
Good day to you.
The debt problem in the Euro Zone and America has led to a ranging EUR/USD. However in recent weeks due to positive developments in the Euro Zone regarding Greece's second bailout, the Euro currency is seeing more demand. Furthermore the apparent failure to reach a conclusion regarding the US debt ceiling by Congress is probably causing a push factor away from the US Dollar too. The threat of a default should the deadline of 2nd August pass is creating a strain for the financial markets and this also further strains the American economy which is already brittle.
Institute of JP Morgan warned that stepping down the U.S. credit rating due to the debt crisis in the country seems likely and it will cost $ 100 billion for the U.S. economy. Rating agency Standard Poor's had already warned on the possibility of a reduction of the credit rating.
The U.S. president warned that if no agreement is reached in Congress to increase the debt ceiling, the country is faced with the threat of a deep economic crisis. Mr Obama spoke in a televised speech that the Republican party is responsible for the country's financial crisis.
Following the escalation of differences between Republicans and Democrats, the situation is getting crucial as the deadline approaches. The world bank president described that the current situation is dangerous and that it is akin to playing with fire. The global financial markets may be disrupted and a global financial crisis may happen. If the parties fail to reduce the deficit, increase taxes and the debt ceiling in America, the US will be virtually bankrupt.
The U.S. president warned that if no agreement is reached in Congress to increase the debt ceiling, the country is faced with the threat of a deep economic crisis. Mr Obama spoke in a televised speech that the Republican party is responsible for the country's financial crisis.
Following the escalation of differences between Republicans and Democrats, the situation is getting crucial as the deadline approaches. The world bank president described that the current situation is dangerous and that it is akin to playing with fire. The global financial markets may be disrupted and a global financial crisis may happen. If the parties fail to reduce the deficit, increase taxes and the debt ceiling in America, the US will be virtually bankrupt.
This is where the most recent reports of declining economic growth of the United States during the second quarter of this year are announced. U.S. Department of Commerce said in its latest report that the country's economic growth during the second quarter of 2011 has dropped to less than 3.1%.
From a technical perspective:
In general, when the EUR/USD is above the 1.4340 level, the main trend is upward. Be cautious of any potential sharp currencies movement on Monday and Tuesday as the deadline approaches. Uncertainty is high.
Have a great weekend.
Masoud
Masoud is a businessman and a Senior Forex Koala. Connect with him at our page on Facebook.
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