EUR USD Rallies as Greek Budget Passes

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Today’s sample of Forex Analysis from ForexHound.com

The EUR USD finished the day higher after the Greek parliament approve a package of budget cuts and tax increases. These financial reforms prompted Greece’s prime minister to state that it wouldn’t need aid from other European Union members. This was probably a response to reports from earlier in the week suggesting that Germany and France stood ready to provide aid to the struggling nation. At one point this week, Greece was even willing to seek aid from the International Monetary Fund.

The apparent resolution of the Greece budget crisis came on the heels of a successful 10-year bond issuance. Demand for the Greek debt was robust although it had to pay a hefting price to encourage interest.

The action by the Greek government to approve fiscal measures designed to shore up the economy is favorable news to the Euro. The move means that Greece is ready to accept fiscal responsibility and begin to move forward. Although the Euro is expected to respond favorably over the short-run, other Euro Region sovereign nations face similar problems if they are unwilling to make the budget cuts necessary to get control of their finances. This is why any rally in the Euro will be short-lived.

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