The Forex Team continues to watch the unfolding drama in Europe with much trepidation. Will the Euro be able to survive in its current form with countries like Spain, Italy, and Greece having burgeoning debt, negative GDP growth, and ineffective austerity measures. These concerns are shared by many economists and financial experts throughout the world. Despite positive economic data in the United States, the possibility of a disorganized Euro collapse,or the rapid devaluation of the Euro currency continues to weigh heavily on investor sentiment.
Countries within the the 27 member Eurozone are responsible for buying many American-based products, including military equipment, vehicles, food, and health products. In fact, European countries account for a substantial portion of U.S. exports. If the Euro were to collapse or significantly depreciate in value against the USD, which has become a real possibility within the last few months, the cost of American products will become relatively more expensive for the European consumer. This will directly impact the United State's GDP, as there will be less consumption. The tenuous rebound in the US economy will falter, and the country will likely slide back into a recession. If this were to occur, the Euro will become much weaker, and the USD will appreciate. However, any appreciation in the USD will be temporary, as the the United States continues to have its own debit issues and high unemployment rate.
To worsen matter, according to the online financial new magazine Marketwatch.com, a member of the Greece governmental coalition is unwilling to sign the new austerity measures set-forth by other Euro-zone members. The Forex Team will continue to watch these unfolding events and update you as they occur.