Euro is the Currency to Watch Out for This Week

By TraderVox.com

Tradervox (Dublin) – For the past few weeks, the 17-nation currency has been considerably subdued by other major currencies such as the yen and the greenback. This has been experienced as European leaders struggled to conjure up with a solution to the debt crisis in Italy, Spain, and the most difficult has been Greece. This week, however, is set to see some change. Euro traders have their eyes fixed on the upcoming euro area Finance Ministers meeting in Copenhagen which is expected to cause some volatility in the euro market. The meeting is aimed at setting a formidable financial firewall that had been suggested as something the European leaders needed to do in order for the single-currency block to safeguard against default.

There has been a heated debate with leaders split on whether a large firewall was necessary. However, two of the most vocal opposition to the establishment of a formidable financial firewall has indicated that they are now ready for such creation in order to avert the crisis in the region. Both Germany and Finland, which initially opposed the creation of a stronger firewall, have in recent times suggested that a major firewall might be necessary for European Union. According to Jyrki Katainen, Finland prime Minister, his country is ready to compromise in order to allow the region to recover from the debt crisis that might spread throughout the euro zone. These comments resonate with unofficial news from Germany showing that the country is also entertaining the idea of creation of a bigger firewall.

The development in the establishment of this major financial firewall has now left the European leaders with the task of establishing the mechanisms of combining the European Stability Mechanism and the European Financial Stability Facility. Combination of these two institutions would create a 750 billion firepower that excludes the 200 billion that has been approved for payment to already troubled nations. This would open the way for the region to get help from other countries such as Brazil, China and Russia through the IMF.

The Euro area finance ministers will meet at the end of the week, but traders will be eying comments from the region’s leaders. 1.33 and 1.35 technical resistances will be the main focus for traders leading up to the meeting.

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