March 14th, 2013
by Mike Ber, Zentrader.ca
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There are reports that German Government is looking significantly to decrease borrowing in 2015. The Government aims to cut new borrowing to just 6.4 billion Euros in 2014, and eliminate borrowing in 2015 completely, a finance ministry official said on Monday.
The figures must be formerly approved by Chancellor Angela Merkel’s cabinet on Wednesday. Germany plans to have a budget surplus of 5.1 billion Euros in 2016 and 9.3 billion Euros in 2017.
The latest report shows just how strong the German finances are, while most of the European economies struggle.
European leaders scheduled to meet on March 14th in Brussels for a 2-day summit. The policy makers will try to draw-up a rescue package for Cypress before it falls into bankruptcy. While Cypress problems can be solved temporarily, there are new clouds on the horizon. EUR/USD dropped significantly after Italian elections, and there is no timeline to resolve the political deadlock in that country. In addition to that, the latest numbers from France show unemployment rates at 13-year high levels, and virtually non-existent growth prospects.
EUR/USD is trading at 1.3027. We mentioned in previous reports that EUR/USD may have a snap back rally, and it remains to be seen if this rally will materialize. We believe that any upward movement will be capped at 1.31836 – 1.32029 levels, where we will be looking to enter shorts or add to short positions. Ultimately we believe EUR/USD will continue to go lower, and there are no signs for our outlook to change. The 1.29656 level serves as support, unless it is decisively broken, 1.2890 is our next level to the downside, and 1.2838 after that.
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