Cyprus Deal Announced – Full of Uncertainties – EUR/USD

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In a late hour in Brussels, the EU, IMF and Cyprus reached a deal regarding the bailout. The good news is that accounts under 100,000 euros will remain insured, contrary to the original plan. EURUSD Jumping and Falling After Cyprus Deal March 25 2013

However, the size of the haircut on bigger deposits is still unknown. EUR/USD had an initial jump, but didn’t go very far and it is falling now.

Analysis: How will the 11th hour Cyprus Bailout affect the Forex Markets?

So what’s in the deal?

The Popular Bank of Cyprus (Laiki) will become less popular and will shut down. The small deposits of up to 100K euros will be transferred to the Bank of Cyprus and will remain insured.

Deposits above 100K euros will be frozen and will be used resolve outstanding debt. Hopefully, big deposits in Laiki will have the sufficient funds to cover the debt. If not, big deposits from the Bank of Cyprus will be tapped into.

Update: The chair of the Cypriot finance committee estimates that losses will reach 30%.

Another update: The size of the levy will be determined by Tuesday.

The deal does not need to approved by the Cypriot parliament, according to the German finance minister, as laws have already been put in place.

EUR/USD

Euro/dollar began the trading week with a gap lower. When trading began, there was a high uncertainty about the deal. When the news about the deal came in, the pair jumped higher and reached 1.3050. However, as European traders entered the scene and the uncertainties were digested, the pair dropped back under 1.30.

Minor support is at 1.2960, with further support at 1.2880. Significant resistance is at 1.31. For more levels, events and analysis, see the EURUSD forecast.

More: EURUSD Could Fall Much Lower In 2013 (Elliott Wave Analysis)

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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 the 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.