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The leaders of the European Union are finally pushing through serious plans to tackle the debt crisis, and the response in the markets is very positive. EUR/USD is rallying  280 pips from the bottom seen earlier in the day, and is approaching long term downtrend resistance.

Earlier in the day, the talks about a selective default, and the ECB agreeing to such, scared EUR/USD and sent it down to around 1.4120. We are now close to 1.44. No, a selective or temporary default is still on the cards, but very serious plans for growth are also on the table.

An interest rate of only 3.5% on future loans, extended loan maturities and most importantly a Marshall Plan for the debt struck country convince the markets that the leaders finally mean business. They still need to implement what they promise and make extra steps, but they seem serious.EUR USD Approaching Long Term Resistance July 21

EUR/USD is now above the resistance line of 1.4375, and below 1.44, awaiting the official presentation of the decision. At these levels, we can also look at the long term downtrend resistance. It stands today at 1.4454, together with the next resistance line.

So, a break above 1.4450 will open the road for further gains. A failure to rise above this level, due to an incomplete plan, or more news of slowdown (just seen earlier today), will weigh on the common currency.

Are you convinced by the measures taken by the EU?

I believe it is a big step forward, but more needs to be done.

For more on EUR/USD, see the euro to dollar forecast.