A fresh report shows that many big European banks were very “creative” when it came to estimating the size of the sovereign debt that they held. This already sent the Euro way down. Will this turn into an avalanche? Is the debt crisis returning through the front door? At the beginning of May, the financial world was rocked by sovereign debt issues in Europe. IT turned from a “Greek tragedy” into an all-European problem, as much bigger countries such as Spain were seen struggling to pay their debt and to finance old loans. The EU pledged 750 billion Euros as a safety net, and after the markets calmed down, major European banks were tested in “stress tests” to see how they will survive problematic debt. The results were outstanding, with only 7 banks out of 91 failing the tests – all small ones. The amount of problematic debt was quite low. Already then, there were doubts about the methods of these stress tests. It’s now clear that the tests were very very problematic. The WSJ reports that many banks were very creative with reporting their exposure to sovereign debt by Spain, Greece and Portugal. For example: BIS data from March 31 indicates that French banks were holding about â‚¬20 billion of Greek sovereign debt and â‚¬35 billion of Spanish sovereign debt. In the stress tests, four French banks, which represent nearly 80% of the assets in France’s banking system, reported holding a total of â‚¬11.6 billion of Greek government debt and â‚¬6.6 billion of Spanish debt. This is bad news for the Euro, that enjoyed a quiet summer on the European front and a problematic one in the US. EUR/USD enjoyed American problems. Is this changing? EUR/USD falls This report sent the Euro down. During the usually quiet Asian session, as American traders are still enjoying the end of Labor Day weekend, EUR/USD collapsed from 1.2880 to 1.2780, and the fall continues. The next minor line of support is at 1.2770, followed by a more significant support line at 1.2722. Lower, 1.2665 is a minor line and 1.2610 is stronghold. A recovery will send the pair towards 1.2840, followed by 1.2930. The debt issues were never fully solved. They were shelved. Germany, France and a handful of stronger European countries continued growing, while Spain, Portugal and Greece suffered from fresh austerity measures. But the German and French banks are still very vulnerable to sovereign debt. A default from one of these countries can create a domino effect that can send also the stronger countries down. Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.. Yohay Elam Yohay Elam Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts. Yohay's Google Profile View All Post By Yohay Elam Forex News Today: Daily Trading NewsOpinions share Read Next Fundamental Overview – Market Movers Last Week – Yohay Elam 12 years A fresh report shows that many big European banks were very "creative" when it came to estimating the size of the sovereign debt that they held. This already sent the Euro way down. Will this turn into an avalanche? Is the debt crisis returning through the front door? At the beginning of May, the financial world was rocked by sovereign debt issues in Europe. IT turned from a "Greek tragedy" into an all-European problem, as much bigger countries such as Spain were seen struggling to pay their debt and to finance old loans. The EU pledged 750 billion Euros as… Top Forex Brokers All Brokers Sponsored Brokers Broker Benefits Min Deposit Score Visit Broker 1 $100T&Cs Apply 0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 9.8 Visit Site FreeBets Reviews$100Your capital is at risk.2 T&Cs Apply 9.8 Visit Site FreeBets Reviews$100Your capital is at risk.3 Recommended Broker $100T&Cs Apply No deposit or withdrawal feesTrade major forex pairs such as EUR/USD with leverage up to 30:1 and tight spreads of 0.9 pips Low $100 minimum deposit to open a trading account 9 Visit Site FreeBets ReviewsYour capital is at risk.4 T&Cs Apply Visit Site FreeBets ReviewsYour capital is at risk.5 Recommended Broker $0T&Cs Apply Trade gold, silver, and platinum directly against major currenciesUp to 1:500 leverage for forex trading24/5 customer service by phone and email 9 Visit Site FreeBets ReviewsYour capital is at risk.