Euro Edges Lower as Greek Repayment Moves into Focus


EUR/USD is trading near 1.1155 after an early Europe rebound stalled at 1.1196. The market is bracing for continued stalemate between Greece and its creditors following Monday’s Eurogroup meeting. Greece’s Tsipras is starting to face up to the fact that he won’t be able to fulfil his election promises, and his support at home is dwindling fast. Creditors have been taking a tough line, confident that Eurozone has the policy armaments in place to deal with Grexit. This may mean a referendum or an election will be seen in Greece, which would likely been seen before an actual Grexit scenario.

The uncertainty should keep the euro biased lower. The dollar, meanwhile, has also hit a soft patch. A run of weaker than expected U.S. data has kept Fed tightening at bay, and while April data have been mostly disappointing and this week’s data are expected to feature benign inflation figures and a moderate rise in retail sales, the economy will likely grow out of its Q1 soft patch as the influence of one-off factors abate.

Greece has to repay EUR 750 m to the IMF Tuesday and even if it can clear that hurdle without further help, it will need to convince the ECB that progress is being made in the talks to unlock further ELA funds.

Looking ahead this week, U.S. markets will mull a variety of likely non-threatening inflation and retail data, while digesting the quarterly Treasury refunding. Preliminary regional GDP figures should reveal improvement and gradual recovery, while inflation remains low but on the rise.

Support on the EUR/USD currency pair is seen near last week’s pivot lower at 1.10. Resistance is seen near the 10-day moving average at 1.1175. Although momentum remain positive the trajectory of the MACD (moving average convergence divergence) index has flattened.

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Source:: Euro Edges Lower as Greek Repayment Moves into Focus

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