Let’s start with the Euro today and then, you might want to read about Italy’s possible innovation, which can be the next big thing in Europe and the world.
Earlier this week, the Euro shocked the banks around the world, rising well above 1.20 mark, the level most of the investment banks considered it would take more than 5 years for the Euro to reach.
Well, the Euro managed to recover above that key resistance for the first time since January of 2015, reaching as high as 1.2065.
However, the Euro eased back once again below 1.20 and continued to decline all the way to 1.1866 earlier this morning.
First of all, trading is not about a one-way trend; every rally will be followed by a retracement, whether on the short or the long term and vice versa.
Moreover, we have been warning about over reacting in shorting the US Dollar index over the past few days, especially that the index was trading near a long-term support area, which remains solid since January 2015.
The area stands between 93.0 and 91.80. Earlier this week, the index declined all the way to 91.60 before it spikes all the way back to as high as 93.0.
The Dollar Index remains within the same area, which means that we are still uncertain whether if it is able to hold and start rising again, or it breaks lower.
The key for the next move is the US Jobs Report which should be watched very carefully. But once again, do not overreact to the data.
Italy Might Find Its Way Out To Growth
The Italian economy has been suffering since the financial crisis until today, with the government crisis and lower economic growth, side by side with higher external debt that crossed above 2 Trillion Euros, it seems that Italy is thinking out of the box, and they might find their way to growth once again.
There are some reports talking about an innovation, which could be quite curious should it be implemented. A parallel currency to run side by side with the Euro!
However, this idea is not new: the European Central Bank was considering that move during the Greek crisis. Yet, no one can speculate how the Greek economy would be today if it had been tried.
Can it Work?
There are many factors involved. However, the Euro is a single currency for the European Union; a parallel currency would mean an exit from the European Union in theory (something that Germany would not allow).
Yet, some countries need a stronger Euro, and some need a cheap euro, and they can’t all agree on such idea for the time being.
But if Italy was able to implement such currency side by side with the Euro, this might lead to a quick solution for Italy’s problems, especially if that currency is controlled by the government as it would gain a great credibility.
It seems that after the Greek crisis and the continuous bailouts, there must be a way to get out of the European financial system, while they can stay in the Union, but we can’t actually figure this way out yet. However, everything is possible, especially as we can see the digital currencies are spreading everywhere.
Whether the digital currency will last or no, its market cap is rising by the minute. I do believe it’s risky, but since the global system has tried almost everything to keep the global economy stable (failed so far), why not to try something new and out of the box?
by Nour Eldeen Al-Hammoury, Orbex
Nour Eldeen Al-Hammoury has more than ten years of experience in focusing on foreign exchange and global economic developments, as well as central bank policies and intermarket analysis (global markets relationships). Nour Eldeen is a regular on many major TV networks (several times each) such as: BBC Radio, BBC World News, Al-Jazeera, Al-Hurra TV CNBC Europe, CNBC Asia, CNBC Arabia, Al Arabiya, Bloomberg, Russia Today, Dubai TV, Sama Dubai, Skynews Arabia, Qatar TV and Future TV News.