AUTOREFRESH 
So, what if there were an EU rescue of Greece?
Let’s, just for the sake of argument, play a game of what if…
What if the EU came up with a watered-down rescue of Greece. One rumor making the rounds earlier today was that the EU or the Eurogroup would guarantee the short-term debts of Greece, perhaps buying them a years time to get their economic house in order.
A package of any sort would likely give the euro a short-term lift as the market sits quite short at the moment. But as today’s price action has shown, there are still ready sellers on rallies.
I think the topside levels to watch are the 1.3850/1.3885 area. A sustained break of that area could see a move to 1.4025. A failure to even challenge the downtrend in place from 1.4582 from mid-January now at 1.3885 would signal susutained weakness to come.
The stronger the package, the stronger the EUR/USD rally, as it would indicate that Europe is finally taking on a federal form after years of loose confederation. I anticipate baby steps, rather than radical reform, however.
I find that talks like this and speculation are suspicious. This is the stuff that drives the market up or down based only on guesses and heresay. To much of this happens when the policy makers just pop off with their nonfactual opinion. Then they get to the office and say “oh, never mind, guess I was wrong”. meanwhile we blow our stops out.
I doesn’t sound unrealistic to guarantee the short term debts but I’d rather wait for a market reaction than trade rumors alone. Anything that will move the market is welcome…it’s bad when it doesn’t move. Everything i’ve managed to get today trading different pairs is a breakeven…
Let’s really play out the scenario: if there’s a rescue of Greece, will it work, or would it require subsequent bailouts? And what would be the logical implications for Portugal, Italy, Ireland and Spain? And if further bailouts would be required, when would the German taxpayers revolt against the system? I’m not sure if the Germans kick Club Med out or if Club Med secedes for the monetary union, but I just don’t see how this works out. It’ll be interesting to see if the media cares to play out the scenario. I’m guessing the larger issues of whether or not it really makes sense for Greece et al to have the same monetary policies as German, France, and the Benelux – and if it is really possible to have economic union without political union – will be addressed later.
@ JR, I think we really need political union in order to not have other surprises like Greece, but would the countries agree with a political union?
If it was to vote, citizens would vote for the union? I’d vote yes but I think many would vote no, there still are socially speaking conflicts between the countries and cultural differences are big.
Ok mechtech–Better to be unprepared than to try and think through potential scenarios…got it…
Always trade the charts, news and rumors are likely to make you loose money if you trade them.
Problem is that EU can’t bailout greece unless all countries agree. And I don’t think the Slovakians would accept it in first place. I still go for backdoor agreenement with IMF. ( Funded by the ECB )
“Always trade the charts, news and rumors are likely to make you loose money if you trade them.” Yep. Follow the momentum.
“And what would be the logical implications for Portugal, Italy, Ireland and Spain?” They’d have their hands out, for sure!
I trade Jamie style no matter from who I hear what I just trade jamie style
Hey Adje, If the EU turns to the IMF then it is admitting that Europe can’t solve a European problem. There are significant implications in that.
[...] EUR By Jamie Coleman || February 9, 2010 at 17:16 GMT || 0 comments || Add comment We expected a short-covering rally on a Greek bailout deal and are nearing important resistance where EUR bear can consider fresh [...]