Anatomy of the EU Economic Crisis – Currency Speculators, In-Crisis Overvalued Selling and the Euro

The European Union (EU) has been widely recognized as one of the greatest economic miracle that the world has ever known views. A few ye cheap nfl jerseys ars ago, the euro, the official currency of the EU as the currency of the United States was celebrated in order to dethrone the dollar. For this reason, many currency speculators dumped their U.S. dollar and euro on a hope that progress continues to be saved. This greatly helped to improve the value of 鈧?extra. What happened exactly, what it means? Currencies are not fixed on a value. However, considerable freedom of the market price, ie supply and demand dictates. If increased security of supply will increase with the increase in demand exceeded the value of a currency. Thanks to the large EU economies like Germany, France and Scandinavian cluster, the demand for euros continuously increased due the unwavering demand for their exports. This has led to the continuous rise of the euro.

This constant rise in the value of the euro were seen by speculators as a golden opportunity to engage in undervalued selling. They take faith in the idea that the euro will continue this positive trend so that they can make money out of it. Even if the daily increase is just a matter of a few cents, many currency speculators can still make major revenue because of the sheer trade volume.

Let us have an example to better illustrate the idea. Here is a theoretical scenario.

It is 8 am, the start of the trading day and the euro is at 1:1 to the dollar. I, as a currency speculator, have 100 dollars. At exactly 8:00 am, I will exchange my 100 dollars with euros, so that I will have 100 euros instead. I will hold onto my euros until the euro increases value. This is what many people did when the euro had a strong showing, so that they drove the demand up, which greatly helped the euro to reinforce its strength.

At noon, the euro inc nfl jerseys reased its value. From 1:1, it went to 1:2, that is, it takes less euros to get a dollar. In essence, my 100 dollars that became 100 euros has now become 200 dollars. Since the increase is pretty much constant, I will hold onto my euro-denominated holdings and draw from it only when I need to. As delaying my withdrawals will imply more gains in the future.

A lot of people did this. Thus, everybody was happy – EU, the Europeans, the speculators... except the U.S