Euro Response to Greek Bailout Success

Forex traders seek to anticipate the Euro response to Greek bailout success. After a painful couple of years the second bailout for Greece has been finalized. An infusion of $172 Billion (€130) has been approved to allow Greece to pay the interest on its government notes coming due in March and going forward. As part of the bailout package Greece has had to agree to very strict austerity measures that include a reduction in government pensions and health care. Private lenders had to agree to substantial write-offs of their notes in order to redeem them. As a backdrop to the Greek debt drama there will be austerity measures in force in virtually all nations in Europe in the months and years ahead. In fact, many expect there to be a recession in Europe in the coming year due to reduced government spending across the length and breadth of the continent. As the debt dilemma developed over the last months there was valid concern that Greece as well as Italy, Spain, or Portugal might leave the European Union. The future of the Euro was in question and now traders look for the Euro response to Greek bailout success.

The Euro response to Greek bailout success was an immediate up tick, a collective sigh of relief on the part of many traders. However, as noted above, a recession may well be next in line for the EU. With an economic downturn will typically come a fall in the value of the Euro versus other currencies. However, currencies are traded in pairs. If Europe goes into a recession the effects will be global. Japan and China are already seeing a falloff in exports to Europe. If their economies suffer so will their currencies. Trading the Euro will be more profitable if one trades against a currency that is not likely to fall when the Euro goes down. For the time being the dollar is showing strength. Then again the US is printing money in order to boost the sales of treasury bills and drive interest rates down. If Mr. Bernanke and the Federal Reserve stop doing this the interest rates on treasury bills will likely go up and the value of the dollar will likely go down.

The Euro response to Greek bailout success will likely be positive over the long run. The debt dilemma has visited a reality check on the nations of the EU. A positive outcome of the crisis has been that economies and fiscal policies of the EU nations will be more closely linked. It will be more difficult for local politicians to buy votes with deficit spending. What this policy envisions is a more economically secure and prosperous European Union. In this case the Euro response to Greek bailout success will, in the long term, be success of the European Union. As Forex traders know, there a multiplicity of factors that can affect the strength of any currency, including the Euro. As such traders are well advised to do their own fundamental and technical analysis, staying abreast of all relevant factors that drive the price of the Euro versus any and all other currencies.