Source: ForexYard
After much deliberation, finance ministers from the European Union (EU) have finally hammered out a plan to offer financial aid to ailing regional economies. The package is just shy of $1 trillion, coming in at $957 billion compartmentalized into three parts: a $560 billion loan program, an additional $76 billion to an already existing loan program, and up to $321 billion offered separately. The initial reaction of the market was a surge in market optimism.
This package is being described as a “shock and awe” tactic to inspire market optimism and demonstrate the commitment of the EU to the integrity of the members to the Euro. This represents something similar to what the United States did with the $700 billion Troubled Asset Relief Program (TARP).
So far the measure has worked in the short-run, but analysts are already expressing doubts. The EUR surged back above 1.3000 against the USD in today’s early trading, but has recently turned back downwards. As long as the Euro-Zone members continue to shore up their financial worries and take drastic measures to rein in spiraling debt, the EUR could continue to see growth. However, the debt remains in the system and won’t likely disappear for some time which means it could spring back up and cause similar problems if the economy remains slow to recover.
Forex Market Analysis provided by Forex Yard.
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