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Thursday, 18 April 15:25 (GMT -05:00)



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George Soros on Ukraine, EURUSD Prospects


 

It seems like the entire world is currently watching and discussing the situation around Ukraine and the Crimea (which was recently joined the Russian Federation after the local referendum).

 

 

 

 
At the same time, the West is getting less willing to provide financial aid to Ukraine, which found itself neck-deep in an economic and political crisis. The declining interest in Ukraine shown by western politicians is quite reasonable. In January, when the change of power wasn't so obvious, Western experts and politicians were advocating the idea of supporting the young and revolutionary republic. Later, when the power changed, the West started leaning from financial support to purely ideological and moral support.
 
There are many reasons for that. Still, the West is not in a hurry to part with the new power in Ukraine, which means that there is still a tiny chance to see another «The Marshall Plan» in the near future. 
 
According to Wikipedia, The Marshall Plan (officially the European Recovery Program, ERP) was the American initiative to aid Europe, in which the United States gave economic support to help rebuild European economies after the end of World War II in order to prevent the spread of Soviet Communism. If you want to learn more about the details of the plan, please follow the link above.
 
It is believed that the mentioned plan helped Europe to recover from the consequences of WWII, with France, Germany, Great Britain, Italy and the Netherlands entering the economic leaders. In short, this plan is believed to be a cure for all economic diseases.
 
Since then ,most experts used the notion to describe the situations when political loyalty is converted into financial aid. Such hopes were laid on Russia in the 1990s, Saakashvili's Georgia and… Ukraine during the first and second Maidans (2004-2005 and 2013-2014 respectively).
 
It is interesting to note that there were talks about a new «Marshall Plan» for the eurozone in 2012, which was in deep crisis back then. Still, the European commission abandoned the idea, calling it a speculative one.
 
A similar plan for Ukraine was supported by the Western financial and economic elite. The Guardian released several dedicated articles, including the interview with George Soros.
Still, when the power in Ukraine changed, Soros was the only one to keep talking about it. It appears, that the USA wanted to implement the plan through its European allies, mainly Germany. Traditionally, Germany pays for everything in Europe since it is the wealthiest and strongest economy in Europe. Soros's words confirm that. His intension to bailout Ukraine is unlikely to be caused by his concerns about the destiny of Ukraine.
 
In reality, the Ukrainian Department of Finance estimated the losses (actual and potential once) to find out that the Ukrainian economy will need $35bn to recover. On top of that, Kiev needs $15bn as soon as possible.
 
 
 
The new Ukrainian government started talks wo the IMF on March 4th to try to get the necessary funding. The decision was expected to be made within 4-5 days. Still, the process was delayed since the expert evaluating the credibility of the Ukrainian economy needed more time to do their job.
 
At this point, Ukraine counts on financial aid from the IMF, which is estimated at $15bn. The first tranche is expected to be equal to $3bn. It may be made within the next 4-5 weeks. The starting point should be the agreement between the IMF and the Ukrainian government, which is constantly delayed. 
 
For now, the European Commission has approved 2 micro-tranches – 100 and 600 million euro. On top of that, the USA and Japan are also determined to provide financial aid to Ukraine – $1bn and $977 million respectively.
 
The US Congress is going to consider the mentioned financial aid to Ukraine today. They are also going to consider the possibility of providing military aid to Ukraine, including arms and fuel supplies.
 
 
Forex
 
Meanwhile, Masterforex-V Academy reports that the eurozone economic data released today look controversial and ambiguous. The US Dollar was down by 0,06% against the common European currency earlier today.
 
As for the near-term prospects of EURUSD, the experts draw our attention to the H4 chart. The vertical blue line indicates the start of the new futures of EURUSD, which is to expire in June. We can also see the beginning of a retracement from the 3rd bullish wave started on February 3rd 2014.
 
The chart also indicates the MF zone represented by the 1,3781 – 1,3809 price range. After the European reports, the price come out of the price range by breaking the bottom of the MF zone.  
 
According to the rules of the Masterforex-V trading system , the break out of the range may be viewed as a hint at the direction of the near-term trend.
 
If the price manages to consolidate below 1.3781, we may see it reaching 1,3748 and even 1,3670. Still, this is going to be a retracement (not a downtrend) until the price breaks below 1,3561. After the price consolidates below the MF pivot, the trend will be reversed.
 
Alternatively, if EURUSD resumes the rally to come back into the MF zone and break above its top, we may well se the price coming up to 1,3844, 1,3941 and maybe even 1,4000.
 
 

 

 

 

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