Euro Moves Higher as Greek Exit Concerns Abate


EUR/USD notched up a two-day highs in touching 1.8000, which marked a gain of about 70 pips from Tuesday’s closing level and extended the recovery from the six-day low at 1.0659. The move took out the 20-day moving average at 1.0772. The 1.0848 Apr 17 high provides the next upside marker. Support is seen near the 10-day moving average at 1.07. Behind the euro’s rally is a moderate contraction in Grexit concerns, with Greek bonds down nearly 33 basis points.

While it’s now clear that there won’t be a deal at Friday’s Eurogroup meeting, ECB’s Coeure said in a newspaper interview today that tangible progress in the quality of the discussions between Greece and its creditors in recent days. Coeure added that significant differences on substance remain and substantial further work is needed. A Eurogroup official was also cited as saying that while liquidity is tight, Greece should have sufficient financing through to June’s deadline.

Additionally helping the European currency was news that the German government lifts growth forecast to 1.8% this year, with private consumption now expected to expand 2%, compared to 1.2% previously expected. Investment growth meanwhile is expected to dip to 2.2% this year compared to 3.4% in 2014, before picking up again and rising 3.1% in 2016. Export growth is seen at 4.7% this year and 4.5% next, although this will be topped by strong import growth, which is put at 5.7% this year and 5.1% next.

Inflation is seen falling to 0.5% in 2015, before picking up again to 1.4% in 2016. Unemployment is set to fall, although despite the stronger than previously expected growth profile employment is forecast to fall slightly. All in all no real surprises, with Germany showing robust growth, boosted mainly by domestic demand and here especially consumption growth.

The post Euro Moves Higher as Greek Exit Concerns Abate appeared first on Forex Circles.

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