EUR/USD is moving up and topping 1.09, the highest level in three weeks, and at a better position within the wide 1.0450 to 1.1050 range that characterizes the pair in the past two months.
The driver seems to be a reshuffling of the Greek negotiation team with the EU/IMF creditors. But digging a bit deeper, things are more complicated, as they always are with Greece and with EUR/USD.
Yanis Varoufakis
Greek finance minister Yanis Varoufakis was apparently sidelined. Euclid Tsakalotos, which is an economics professor, will head the negotiations with the creditors formerly known as the troika.
The outspoken finance minister has reportedly been grilled by his European colleagues in Riga on Friday. They were never able to cope with his style. The German press has already reported in various occasions that he is “about to quite”. This hasn’t happened.
They have blamed him for wasting time and it indeed seems that time is running out. The Greek government took steps to hoard cash from local authorities and hold it at the central bank, but this isn’t really working.
But did Varoufakis really run the show beforehand? He is the finance minister, not the Prime Minister. His boss, Alexis Tsipras, has always been involved, and has already directly intervened back in February.
Tsipras recently met and talked on the phone with German Chancellor Angela Merkel. It only makes sense that the leader of the country is involved in the most critical issue.
As aforementioned, FinMin Varoufakis is quite outspoken. His outstanding verbal skills have significantly contributed to internationalizing the Greek crisis and explaining the situation to millions around the world.
I don’t believe he is going to disappear anytime soon. The tough stance from Athens will likely be presented by someone who is more soft-spoken.
The market moves
In any case, the news from Athens pushed Greek bond yields down, the stock market up and is also being felt in the euro.
For EUR/USD, there is another reason to rise: the weakness of the US dollar. The greenback is still feeling the unconvincing economic data seen last week.
So far this week, we had another minor shortfall from the Markit Services PMI. The miss was not huge and the indicator is not so significant, but it just provided traders another reason to sell.
What’s next for EUR/USD?
- Sell EUR/USD At Current Levels: Here Is Why – Barclays
- EUR Rallies A Sell Irrespective Of Greece Conditions – Credit Agricole
Here is how it looks on the daily chart. As you can see, the pair is now higher in the wide range, but still looking for a direction.
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