After the turmoil caused by the Italian elections and the negative Spanish unemployment figures, it looked like the EUR/USD pair would return above the 1.30 threshold. While European economies failed to rebound in March, the numbers were not exactly worrisome and the number or bears decreased sharply. The recent crisis in Cyprus has the potential of hurting the Euro badly and the most recent news suggest that the outcome of this new emergency will send shockwaves throughout the entire European Union.
Monday Is the Decisive Day For Cyprus
Binary options traders are in the fortunate position of capitalizing on this explosive situation, because they can collect quick profits. Depending on whether a solutions is reached by Tuesday morning or not, the Euro will either plunge or rally but most data suggest that Cyprus won't be able to talk its way out of this mess. After the Parliament rejected the solution suggested by the ECB, the president traveled to Brussels to reach an agreement so that the European Central Bank wouldn't't cut the country out of the money loop.
European officials seem unwilling to cut Cyprus any slack and some rumors indicate that the IMF is making new requests on an hourly basis. This suggests that the country is slowly but surely pushed out of the Eurozone and by Tuesday when the banks open, a definitive solution will be reached. Bank accounts over 100K will be subject to a haircut and the only real question is how significant this adjustment will be. The best case scenario involves a last minute agreement that will keep the country in the European Union, but even so a lot of money will be leaving Cyprus on Tuesday morning when the banks open.
Germany and France Are Not Faring Well Enough
The news coming from Germany are not necessarily bad, at least not if compared with the rest of the European Union but the country is expected to meet increasingly high expectations. The consumer sentiment increases in Germany but at a snail's pace and the same happens with the German import prices, with the grow counting in 0.1%. The unemployment rate has been kept below 7% which is not surprising and the money supply also climbed a bit. Unfortunately for the Germans and the ones counting on them to pull the Euro after them, the data coming from France is less impressive.
Here the consumer spending declined abruptly by 0.8% in January and the one to blame is the car industry where the sales were mediocre at best. At the same time the unemployment is rising, which explains why the short term prognosis are all based on data that suggest a mild recession. On the other side of the ocean things are far from being perfect, but the fact that the Euro couldn't't capitalize on the effects of quantitative easing speaks for itself.