After being pressed down earlier in the day, EUR/USD jumped to around 1.44 on fresh Spanish steps to curb debt, and rumors that the Fed will have an emergency meeting to announce new steps. QE3? The rumors don’t seem to be based at the moment.
The Spanish government decided on new cuts in spending. The decision was made after negotiations with unions, that were ready to accept lower wages. This is a serious step that will ensure no serious opposition.
The government also decided to slash the tax when buying homes from 8% to 4%. This step is intended in order to reduce the huge stock of homes in Spain, that is estimated to be a stock that can last for 6 years. Spain has had a huge boom and bust.
In addition, there are unbased rumors that the Federal Reserve will hold an emergency meeting later today. Some speculate that the Fed will make an announcement about QE3. Currently, Fed officials are scheduled to speak later in the day, and no real signs of such a meeting are seen.
QE3 might help the troubled stock markets, but will ignite more inflation in the US, and currently the US already has enough inflation.
EUR/USD is now just above 1.44. The next resistance line is 1.4450, followed by 1.4520. Support is at 1.4350, followed by 1.4282 – a line where the euro stood on earlier in the day.
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