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EU Financial Crisis – Weekly fundamental outlook

Is Commerzbank the next Lehman Brothers? During the weekly fundamental outlook we look into what traders should be expecting from this week’s banking rumors.

Looking into the financial markets many events at the moment can resemble 2007 – 2008 just before the mortgage crisis hit the US banking system which spread around the world immediately. During that period there were rumors that Lehman Brothers’ investment unit was holding toxic mortgages, which many investors tried to ignore by saying “It is ok. They are too big to fail” Nowadays, there are other rumors in the market that one of the largest banks in Europe, Commerzbank in Germany is in trouble and they are holding massive sum of toxic assets.

Investors are ignoring this big news, however if the rumors were to reflect the truth the Europe would be in a massive danger then! Being one of the top 2 banks in Germany, Commerzbank’s operations spread much beyond Germany and any shake-up there would shake the Europe as a whole and would be devastating for not only the regional economy but also endanger the global prosperity for another 8 years at least.

May the rumors be true and Commerzbank crash become subject to news headlines, it is likely that the ECB will initiate another round of complex quantitative easing to save the bank. However, according to the legislative change there is more possibility in simple bailout for commercial banks. Which means that shareholders, bond holders and depositors would be effected similar to Cyprus bailout program when the Laiki bank went busted.

Given the weekly fundamental outlook, GBP, USD, JPY, Gold and Crude Oil are among the most anticipated tradable instruments for the week ahead.

Crude oil is expected to find its support at $39.45 level with targets towards $42 – $44 level.

Gold is expected to find its support at $1350 and if this level is broken the following support is at $1327 – $1337 levels where traders can look for bullish positioning with targets towards $1372 once again

GBPUSD has its resistance at 1.3319 and support at 1.3061

USDJPY  meanwhile is expected to be consolidating between 100 – 101.50 levels for now.

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