Euro Falls below Forex Entry Price

The EU currency, the Euro, started trading in Forex markets in 1999. It first traded at one Euro to $1.1747 US. Europe is in danger of falling back into recession and even worse into a period of deflation. At long last the EU appears to be ready to follow the example of the US Federal Reserve and its quantitative easing campaign. The Fed purchased $85 Billion a month in US Treasury and corporate bonds thus driving interest rates down and injecting money and credit into the economy. The result has been economic growth in the USA, reduced unemployment to levels not seen in a decade and a healthy US dollar. We noted that the prospect of quantitative easing forces Euro downward. Now we see that the Euro falls below the Forex entry price of fifteen years ago.

New Lows for the Euro

In order to improve its economy the EU is coming around to the point of view of the US Federal Reserve and especially is former head, Ben Bernanke. The quantitative easing policy will drive interest rates down and the Euro below the 1999 launch rate. Reuters follows the story.

The euro fell below its 1999 launch rate against the dollar for the first time in over nine years on Wednesday after an adviser to Europe’s highest court said an ECB bond-buying program was legal under certain conditions.

As investors worried about global growth, the safe-haven yen rose to a 2-1/2-month high against Europe’s common currency and a one-month high versus the dollar.

The euro fell against the dollar following the adviser’s opinion, hitting a nine-year low of $1.1728, down 0.3 percent on the day and below the psychologically important $1.1747 level at which the single currency first traded on Jan. 4, 1999.

Traders will likely be betting on a steadily falling Euro when this program starts. The question as the Euro falls below its Forex entry price just how much farther it will drop before it stabilizes.

Greek Debt Dilemma

Elections are coming up in Greece and there is a strong likelihood that the new government will want debt relief from the EU, new terms on repayment and more money. The thinking in the rest of the EU depends upon whether your country recently had debt problems or not. The Financial Times reports that the Prime Minister of Finland strong opposes Greek debt forgiveness.

Finland’s prime minister has warned that the Nordic country would give a “resounding no” to any move to forgive Greece’s debts in comments that represent a high-profile intervention in the country’s upcoming election.

The warning from Alex Stubb in an interview with the Financial Times puts Finland on a collision course with Syriza, the radical left party that is currently leading the polls in Greece and has put debt relief at the core of its election proposals.

Finland was one of the countries that dug into its pockets to finance Greek debt. On the other hand Ireland had debt problems and was the recipient of an EU bailout.

The EUObserver reports that Ireland signals support for helping Greece again.

Ireland has signalled support for a European debt conference demanded by the far-left Syriza party likely to win the upcoming Greek elections.

Irish finance minister Michael Noonan told a gathering of Irish ambassadors in Dublin he would not dismiss the idea of Greek, Irish, Spanish and Portuguese debt being discussed at a European debt conference, the Irish Times reports.

This is the first time an EU politician has been publicly favourable of the idea, which has been at the core of the campaign led by Syriza and its young leader, Alexis Tsipras.

To keep the EU together nations like Greece will from time to time require help as their debts are held in Euros and they do not have the luxury of devaluating their currency. On the other hand as the Euro falls below its Forex entry point the European Central bank may be doing that for them.