Friday, June 29, 2012

Euro Rallies After EU Leaders Loosen Bailout Policy at Euro Summit

Read this AP article for details on the Euro summit. Like monetary policy, it looks like EU leaders agreed to loosen bailout policy to make future bailouts more efficient. Here are the big changes.

  1. Bailout funds can now recapitalize banks directly.
  2. EU countries following budget rules can now apply for bailouts without "stringent conditions."
  3. EU leaders agreed on “the four building blocks” of a tighter European Union (more details in October).

The euro initially spiked to 1.2626 on the news but is now trading at 1.2591. I think EUR/USD needs to break through that 1.2624 ceiling resistance level (multi-month low on 1/13/2012, second chart) to attempt a rally to 1.29 (downtrend resistance) in the near-term.




Source: FreeStockCharts.com

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