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Euro Edges Lower Following Approval of Greek Bailout by Finance Ministers
The Euro lost ground to the greenback on Monday, despite a better than expected trade surplus which showed that a declining currency allowed Europe to gain a trade advantage and benefit from stronger growth. A 3rd Greek bailout was approved late in the day on Friday, which will now move forward to the national parliaments.
Eurozone Finance Ministers approved the 3rd Greek bailout late Friday, paving the way for the evaluation by national parliaments, first and foremost the German lower house this week. Merkel is facing mounting criticism of further aid to Greece and while the central scenario is an approval by German lawmakers, Tsipras is on a tight schedule to get funds ahead of Thursday’s ECB repayment and avoid another bridge loan.
Reports suggest that following the disintegration of the Syriza coalition over the bailout deal he will ask lawmakers for a vote of confidence once the ECB repayment is out of the way. Even if he survives for now, early elections before the year is out are increasingly likely and if anti-bailout forces win even more support the Greek crisis could still flare up again.
After breaking out above trend line resistance, the EUR/USD is poised to test support near the 10-day moving average near 1.1025. Resistance is seen near last week’s highs at 1.12. Momentum remains positive as the MACD (moving average convergence divergence) prints in positive territory with an upward sloping trajectory.
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