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Is Euro About To Crash?

Is Euro About To Crash?

The euro has stabilized in today’s trading session after suffering a big drop on Friday and the losses may continue to come as political instability grips the EU

German chancellor Angela Merkel has been one of the most welcoming political leaders in Europe by opening the borders and letting in an estimated one million migrants over the last 3 years and now that kindness is coming back to bite as her own party turn on her which may see the end of her political career as early as this week.

Merkel wants Germany to abide by European rules concerning immigrants while her government colleagues are demanding that Germany close the borders to New immigrants which some say would cause chaos on the European continent as also spell disaster for the euro.

“Angela Merkel’s coalition is coming under increasing strain over the migrant issue. Ms. Merkel is insisting that Germany abide by a pan-European solution while her partners are pressing for a German only policy response,” said Boris Schlossberg, managing director of FX strategy at BK Asset Management.

“The friction is so tense that markets are becoming genuinely concerned that her government could fall which would have hugely negative ramifications for the euro as Germany is the de-facto anchor for the currency. The pair looks vulnerable to test 1.1500, but could fall much further if the crisis in Germany spins out of control,” he added.

The real crisis looming in the background is the fear that restricting immigrants with border checks may be the start of tighter border controls which then may lead to the destruction of the Schengen zone and the freedom of movement for EU citizens.

Merkel’s partners have promised to fight to the end in order to avoid this situation.

“The CDU stands behind the chancellor; the CDU stands behind a European approach,” said Armin Laschet, prime minister of North Rhine-Westphalia and a deputy CDU chairman.

“We will not accept abandoning the Schengen system on the borders with Belgium, the Netherlands, France and Luxembourg. We will fight for that, and on this point there’s no latitude for the chancellor.” he added.

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