European mass media seem to behave like juvenile delinquents… as if the reality isn’t tough enough. They keep escalating the panic by predicting new financial and economic shocks in the eurozone. Are these predictions based on logic and facts? Or maybe this is just their fantasy? Let’s try do find this out together with Masterforex-V Academy…
Crisis Again?
German media insist that the southern part of the eurozone still presents certain threats to the stability and prosperity of Europe, its economy and common currency. Cyprus , Greece and Portugal keep making journalists and analysts anticipating another wave of crisis phenomena in the area. While Greece remains the personification of European financial and economic problems, the Portuguese government has miraculously avoided resignation but Portugal ’s debt may well inflate up to 140% of the national GDP by 2014. Greece failed to meet some requirements set by the troika, including job cuts and privatization programs. The situation seems to be getting worse, Western media say.
At the same time, Cyprus has difficulty meeting the requirements necessary to get financial aid, and the country is unlikely to meet them in the future. Since Cyprus ’s plead to ease the requirements was rejected by Brussels, the country may have to quit the eurozone. Pessimistic experts urge Greece to quit the eurozone as well. Apparently, financial markets cannot just ignore these predictions and the panic keeps escalating, Masterforex-V academy reports.
Experts Split Over Eurozone Crisis
At the same time, numerous experts are divided over the issue, thereby starting disputes and confrontations. Some of them say there is no new crisis and it is the old one that is underway. They are convinced that the debt crisis hasn’t ever weakened since the beginning while the ECB’s easing just let the eurozone delay some consequences, thereby extending the crisis further into the future.
At the same time, other experts assume that this is a recovery rather than a new crisis. They say that risky eurozone economies are getting used to saving money and living in austerity and instability. Structural reforms are being performed as well. They say that even though the progress is very slow, it is not the reason to escalate the panic by giving gloomy predictions.
Well, Greece’s debt has increase up to 175% of the GDP, which can hardly be called “not the reason”… Nevertheless, they believe Greece is still capable of decreasing it down to 110% by 2020.
Most of the solution depends on Germany, which is expected to preserve its tough standpoint over the Greek issue at least until the forthcoming elections. Yet, there is a chance that after the elections Germany may write down a part of the Greek debt. Anyway, these are just pure suppositions. Meanwhile, it is high time to face the crisis reality:
· Cyprus , Portugal and Greece still have their bond yields moving farm form the accepted levels (7% now versus 16% in 2012).
· The spread between the bond yields of emerging and developed markets is narrowing.
· The currency market is still feverish. The uncertainty around the ECB and the Fed’s accommodative policies undermine the common currency.
· The expected slowdown in the US economy is destined to aggravate the situation in Europe.
Crisis? Yes, Indeed… The Old One
The crisis is the same. There is not entering a new stage since the situations in various risky eurozone economies are not identical. For example, Portuguese problems are of political rather than economic nature. The problems existing in southern eurozone economies do not indicate nay systemic collapses in the eurozone in general.
On top of that, Spain and Italy (major eurozone economies along with Germany and France) has almost left the list of risky economies, which is a major achievement for the eurozone. As for Ireland, it has almost reached the pre-crisis levels. Therefore, this is still the first wave of the crisis. It is too early to talk about double-dip recessions.
EURUSD Outlook
According to Masterforex-V Academy, EURUSD is down to 1.3188 while gold is down to $1283,10/oz.
The chart below, courtesy of Masterforex-V Academy, reflects the current state of affairs in the market of EURUSD:
The chart indicates 2 waves of level H4 (green lines). Within the scope of the pattern, volume clusters are located around 1,3080-90. The 3rd wave may well be underway since there is a red wave inside it. The scenario still holds true and will be confirmed if the price consolidates below 1.3080.
However, the bullish scenario (blue lines) is still possible as well. If the price consolidates above 1.3320, 1.3380, 1.3417, this will give way to further local highs at 1.3490 - 1.3500.
