The summit of the European prime ministers will be held today in Brussels, which is in focus of all traders and gives high expectations to financial markets.
Usually such meetings do not result in something productive, like the G7, G8, G20, etc. But in this case, many things are at stake, particularly, the stability of the Eurozone, which is under the threat of a few factors.
Normally there are differences between the members of the Eurozone. The new French government wants to support growth, it considers it logical that if you want to make it out of the crisis, thus it openly confronted with the position of the German austerity measures.
No prizes needed for guessing that without growth recession will remain. But wasting resources in the manner of Greece or Spain in recent years cannot be proven. A sensible formula is to abandon the populist welfarism, financing public works and private endeavors in nature, i.e., optimizing the available resources, which every day appear scarcer.
But according to officials who have political pressures on the one hand, on the other, the ideological issues, and secondly, probably ultimately needs to their constituents, it is too difficult in these instances.
So most traders do not expect solutions to the summit of the date, which could be limited to front-page ads, but difficult to perform.
The little faith in the markets at this meeting is reflected in the price of the euro, which fell for hours at its lowest since August, 25, touching 1.2612. The slow recovery that occurs in this time coincides with a tepid recovery in European markets, which operate with very modest increases. Only overcoming 1.2680 first, and 1.2720 second, could give upward velocity of the single currency, which in any case retains a downtrend for the short term.
The same applies to the pound sterling, which fell to its lowest of March 15, before starting a modest recovery that now experiences as a more pronounced. The British currency lost positions rapidly in recent days, but it could grow for the rest of the week if the euro starts to show signs upward direction.
Moreover, the yen, which seemed to fall after strong debt rating cut by Fitch on Tuesday, managed to recover after the announcement of the Bank of Japan not to increase the stimulus to the economy. Such plans could be increased from next July, in which case the JPY could lose out on all fronts. Anyway, following our criteria explained in the previous day, we believe that the yen could go to the area of 82 units per dollar in the coming weeks.