Natalia Grigorieva
Fundamental analysis
The euro started falling down on Monday, as political accidents of the last weekend caused escaping from risks. Confidence in the ability of Europe to cope with the debt crisis brought about Angela Merkel’s party defeat in regional elections and the decision of Greek prime minister to cancel his visit to the USA due to urgent meeting of the cabinet."What happens this week? The euro is going to come under pressure — as it already has this morning," said Rob Ryan, FX strategist at BNP Paribas in Singapore.
Despite an unexpected decision of five largest central banks to provide European banks with considerable dollar liquidity made on Thursday, market participants are still uncertain that the financial troubles will be mitigated in the nearest time. Moreover, Parliaments of all eurozone countries are to ratify the decision on boosting the European Financial Stability Facility, which is hardly guaranteed though.
On Sunday Greece pledged to make firm decisions to avoid a default; however it did not announce a fresh round of austerity measures. "Greece has a substantial problem, perhaps an insoluble one," said David Feldman, President of investment firm Palladiem Partners, L.P. "I don't see an easy exit for them."
The lack of a permanent solution means that the probability of a disorderly default is "uncomfortably close to 50/50". That would put further pressure on the euro. Greek Prime Minister George Papandreou cancelled a visit to the United States to chair a cabinet meeting as on the following day EU and IMF inspectors were to come and ask his Finance Minister Evangelous Venizelos about Athens’s plans to patch Greek budget holes.
http://instaforex.com/forex_analysis/39020/?x=OUE
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