Cracks Widen in EU Summit Deal – IMF Loan Plan

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One of the plans made in the recent EU Summit was that European governments would lend money to the IMF, and that this money would help the indebted countries.

The plan was to present the details by now. Well, not everyone wants to participate, and some of the participants need aid by themselves. This is weighing on the euro. Here are 5 skeptic countries:

  1. UK: This non-euro EU member already split up with the rest of the 26 countries in the summit. It rejects more injections to the IMF.
  2. Sweden: Also this non euro country has some conditions. Even if this country agrees, the deal won’t come on time.
  3. Finland: This euro-member country has already put conditions for providing more aid to Greece.  It doesn’t like the change in the unanimity rules that govern the ESM. This could risk their support of the IMF loans.
  4. Germany: Yes, while Angela Merkel pushed the summit plans forward, the German central bank (Bundesbank) is reluctant to provide the IMF with money.
  5. Italy: The euro-zone’s third largest economy is supposed to be a recipient of aid, yet it is required to contribute to the extra IMF money. This doesn’t make sense…

In addition, the leaders failed to agree on bigger ESM bailout fund.

All in all, we now see more pieces of the December 9 summit falling apart – same as with the previous summit.

EUR/USD is now looking to drop under 1.30 once again, still far from the 1.2945 trough seen last week, but also far from resistance at 1.3060. Will we see a challenge of the year-to-date low?

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

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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.