How EUR Could React to Irish Bailout

A great deal of discussion has been had about whether or not Ireland needs a bailout. However as currency traders, what is important to us is how the euro could react if the speculation becomes reality and history can be particularly useful for this purpose.

Greece received a record breaking bailout the weekend of May 2nd . On the first trading day after the bailout announcement was made, the EUR/USD plunged 100 pips which is not that significant but over the course of that week, it fell as much as much as 750 pips. Between May 3rd (the Monday after the announcement) and June 7th , the EUR/USD fell approximately 10 percent. However, as sovereign debt worries receded and Greece faded from the minds of global investors, the EUR/USD stabilized and began a risk assumption rally that brought the currency pair from 1.20 to 1.42. This means there is first panic and then stability.

About Kathy Lien 235 Articles

Kathy Lien is an Internationally Published Author and Chief Strategist of, one of the world’s most popular online websites for currency research. Her trading books include the highly acclaimed, Day Trading the Currency Market: Technical and Fundamental Strategies to Profit form Market Swings (2005, Wiley); High Probability Trading Setups for the Currency Market E-Book (2006, Investopedia); and Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game (2007, Wiley). As Chief Currency Strategist at FXCM, Kathy is responsible for providing research and analysis for DailyFX, the research arm of FXCM. She also co-edits the BK Forex Advisor, an Premium Service with Boris Schlossberg – one of the few investment advisory letters focusing strictly on the 2 Trillion/day FX market.

Kathy is also one of the authors of Investopedia’s Forex Education section and has written for, the Asia Times Online, Stocks & Commodities Magazine, MarketWatch, ActiveTrader Magazine, Currency Trader, Futures Magazine and SFO. She is frequently quoted by Bloomberg, Reuters, the Wall street Journal, and the International Herald Tribune and has appeared on CNN, CNBC, CBS and Bloomberg Radio. She has also hosted trader chats on EliteTrader, eSignal and FXStreet, sharing her expertise in both technical and fundamental analysis.

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