Euro Climbs a Big Figure on Encouraging Progress from Eurogroup Meeting


The EUR/USD rallied more than a big figure to a two-day peak of 1.1279 as market participants bid up the currency pair following encouraging progress from the Eurogroup Monday. The decline in the dollar was correlated with a renewed surge in Bund yields, even though the dollar yield advantage widened slightly to the 163 basis points with the 10-year T-note over Bund yields. The recent run of weaker than expected U.S. data has left the dollar with a substantially weakened narrative on the Fed’s course to tightening.

Progress in Greek talks should help the ECB and give it time to work its magic. The Eurogroup statement late Monday was largely as expected and noted progress in the talks, but no real breakthrough yet. Still, the more optimistic view on the state of play will help the ECB to extend its ELA assistance to Greece and hold with a hike in haircuts on Greek collateral for now.

Eurogroup head Dijsselbloem suggested a partial payout of the remaining bailout fund in exchange for reform implementation may be possible and Greek reportedly paid the IMF funds due Tuesday although even Varoufakis admits now that the liquidity squeeze is getting very urgent and the risk of default remains. The new government has to ditch its election promises to get a deal fast and a referendum may be a way to get the electorates blessing for the turnaround.

It will be important for the ECB to remain in contact as the IMF doesn’t want to participate in new Greek bailout. The IMF doesn’t want to take part in yet another rescue programmer for the beleaguered Eurozone country and leave it to the Eurogroup and the ECB to secure Greece’s long term future in the currency union.

The technicals on the EUR/USD look promising as the exchange rate heads to test resistance near a downward sloping trend line at 1.1365. Support is seen near the 10-day moving average near 1.1200. Momentum remains positive where the MACD (moving average convergence divergence) index prints in positive territory with an upward sloping trajectory.

The post Euro Climbs a Big Figure on Encouraging Progress from Eurogroup Meeting appeared first on Forex Circles.

Source:: Euro Climbs a Big Figure on Encouraging Progress from Eurogroup Meeting

About the Author
ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC. Our mission is to maximize the value our clients derive from their most precious commodity, "Time"! By offering advanced and innovative services, optimal customer care and perpetual devotion to our clients, we will ensure that their individual needs are always met as markets continue to evolve over time. Visit ForexTime to learn more [space height="20"] [social type="facebook"][/social] [social type="twitter"][/social] [social type="google-plus"][/social] [social type="youtube"][/social]

Leave a Reply