Greek PM Alexis Tsipras is meeting IMF MD Christine Lagarde, ECB President Mario Draghi and EC President Jean-Claude Juncker. Later, at 11:00 GMT, the finance ministers meet again.
Update: EUR/USD falls and rises on conflicting reports about a Greek deal
EUR/USD is hugging the 1.12 level from both sides. It is sticking to these levels and awaiting an outcome. However, the reaction might not be that straightforward.
On Monday there was a lot of hope for a resolution: Greece had submitted a new offer, suggesting higher taxes and some cuts to the military. The European ministers welcomed the proposal and said it was a basis for talks.
However, the IMF returned its own document on Wednesday, and this included red “track changes” strikethroughs all along the document, striking literal red lines on Greece’s figurative ones.
This was answered with anger by Greece. The European Union is stuck in the middle. It could support Greece’s measures, contrasting the IMF, but certainly opposes debt restructuring, which is supported by the IMF.
Resistance is at 1.1290 and support around 1.1150, but the pair is converging in a more narrow range. Further levels to watch are 1.1375 which is critical resistance and 1.1050 which is critical support.
This consolidation cannot last forever: end of month, quarter and year adjustments, US data and of course news about Greece could hit at anytime.
But, the reaction to Greek news could be counter-intuitive: we could see a fall in the euro on hopes for a deal, as this would trigger a “risk on” sentiment. And on trouble in the negotiations, we could see the euro supported.
The common currency may have turned not only to a funding one but already to a safe haven one.
More: Trading Greece: EUR’s Reaction Function – BNPP
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