Cyprus: Latest Talks Broke Up Without Result

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Talks between the European Union, the IMF and Cyprus broke up on Saturday without any result. This is the latest from Cyprus, where the situation moves from hope to despair during the weekend.

Update early Monday: A deal was announced, but it has many uncertainties. EUR/USD is not going anywhere fast.

Update Sunday 18:50 GMT: Talks are getting deeper into the mud. The meeting was postponed and a report from Cyprus says that the IMF is “making new demands every half hour”. It seems that Cyprus is pushed out pf the euro-zone.

The ECB already announced that it will cut off liquidity on Monday, March 25th and this could result in Cyprus leaving the euro-zone. Towards this deadline, Cypriot president Nicos Anastasiades flies to Brussels in order to accelerate negotiations. The results of these talks will significantly impact the value of the euro when trading commences.

He said that “negotiations are in a delicate phase” and that “the situation is very difficult and the deadlines are very tight”.

At 17:00 GMT, euro-zone finance ministers will meet in Brussels. Cyprus is the only topic on the agenda. Other events have been cancelled. This is a very intense weekend.

On Monday, the ECB deadline expires, and banks are set to open on Tuesday, after being closed for over a week.

During Saturday, there was some cautious optimism from the small island nation. The parliament in Nicosia already passed several bills that would promote a solution, but it didn’t deal with the controversial bank levy.

The recent suggestion regarding the banks was that investors at the Bank of Cyprus would see a cut of 20-25% on every euro above 100K, and that investors in other banks would see a cut of 4% on those accounts.

This suggestion spared the small bank account holders. Under EU rules, accounts of up to 100,000 euros are insured. The mere suggestion of taxing small accounts has already hurt confidence.

EUR/USD

The common currency advanced on Friday on hopes for a resolution in Cyprus. It bounced from support at 1.2880 all the way to 1.30, but couldn’t break higher.

1.2960 serves as minor support, followed by 1.2880 and 1.28. Resistance above 1.30 is at 1.31. For more levels, see the EUR USD forecast.

In case of a last minute deal, the euro will likely jump higher with a Sunday gap at the opening. However, the lost confidence, the recession and debt related issues in other countries could keep it down.

In case no deal is reached by the opening, the pair could gap down significantly as well.

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Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

6 Comments

  1. Pingback: Cyprus: Latest Talks Broke Up Without Result | Beginning Forex

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  3. What you have written is just sensational and untrue. This will be proved later today.

  4. Pingback: Is Cyprus pushed out of the euro-zone? | Forex Crunch

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