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Euro Edges Lower as Traders Eye Greek Payments
EUR/USD has come under pressure after trading steadily during Asian’s session. The pair has dipped to 1.0840 from the upper 1.08s. The intraday peak was short of Friday’s 1.0900 peak. Support is at 1.0845 and 1.0769, which is the current position of the 20-day moving average. Resistance is at 1.0897-1.0900, which encompasses the 50-day moving average and Friday’s peak
The Greek government, after failing to get an agreement with its creditors last week that may have unlocked further aid payments, already froze local government accounts and those of public entities in order to be able to cover month end payments. There are now reports that tax debtors are seeing their accounts frozen, which some see as a sign of the arrival of capital controls. Sizeable amounts of savings were apparently withdrawn last week, but the report by Kathimerini of a tax debtor that saw his account frozen until he paid his dues may be mainly part of a tax crackdown.
That tax authorities have access to bank accounts is not unusual and that taxes due are directly withdrawn from accounts is practice in other European countries. Still, it clearly is true that the government is increasingly facing a cash crisis and that Greek banks, while still hanging on the lifeline of ELA assistance are fearing a possible increase in haircuts on Greek collateral, which would add to their own problems.
In economic data released Monday, German April import price inflation rose to -1.4% year over year from -3.0% year over year, with prices up 1.0% month over month amid the weaker EUR, which is pushing up import prices. Together with the fact that base effects from lower energy prices are falling out of the equation the weaker EUR will quickly bring headline rates back into positive territory, confirming that there is no risk of a deflationary spiral and that inflation numbers may rise quicker than previously thought amid the ECB’s very expansionary policy and the rise in domestic demand.
The post Euro Edges Lower as Traders Eye Greek Payments appeared first on Forex Circles.
