EUR/USD is now trading a bit lower in the high range, after consolidating big gains. Reports about negotiations between Spain and its European peers gave the euro its most recent push higher, in a very positive week. Tension is high towards a meeting between the leaders of Greece and Germany today. Recent statements from German officials have been quite tough recently. Greek PM Samaras said he only wants more time, not more money. Will a compromise be found?
Here’s an update about technical lines, fundamental indicators and sentiment regarding EUR/USD.
- Asian session: Euro/dollar slid from the resistance line of 1.2587 and traded steadily. A small drop towards the 1.2520 resulted in a bounce.
- Current range: 1.2520 to 1.2587
- Below: 1.2520, 1.2440, 1.24, 1.2360, 1.2330, 1.2250, 1.22, 1.2144, 1.2043, 1.20, 1.1876 and 1.17.
- Above: 1.2587, 1.2623, 1.2670, 1.2743 and 1.2814.
- 1.2623 is a strong line of resistance.
- 1.2520 is now providing support.
- Uptrend support is currently very far.
Euro/Dollar steady on high ground – click on the graph to enlarge.
- German Chancellor Angela Merkel and Greek PM Anotnis Samaras meet.
- 12:30 US Durable Goods Orders. Exp. +1.6%. Core orders exp. 0.5%.
- 13:00 Belgian NBB Business Climate. Exp. -11.6 points.
- Greek PM seeks bailout “breather”: Prime Minister Antonis Samaras is seeking an extension until 2016 to meet the bailout targets, while Germany and Greek creditors object to giving Greece more time and more money. Samaras met with Euro-zone chief Jean-Claude Juncker in Athens on Wednesday, and is now meeting paymaster Merkel. He will meet French president Hollande tomorrow. In the meantime, talks about a manageable Grexit are surfacing: this time from the ECB’s JÃ¶rg Assmussen, that echoed Eurogroup chief Juncker. Talks with the troika will continue in September. Greek Finance Minister Yannis Stournaras stated that the government was considering presenting the troika with an austerity plan with spending cuts of some 11.5 billion euros. See how to trade the Grexit with EUR/USD.
- Spanish aid getting closer: After Germany’s approval, came reports about ongoing negotiations between Spain and its European peers regarding a formal aid request. This isn’t too surprising, but it gave the euro a boost. Government meeting are held on Fridays in Spain. A formal aid request could come today, but it is much more likely to be seen on August 31st.
- Doubts about QE3 in September: After the euphoria from dovish meeting minutes, doubts began to rise. FOMC member James Bullard said that markets are overpricing the chance of QE3. He also said that the minutes are already stale. Indeed, the Fed discussed other options and the economy has been improving since then. Even the weak manufacturing sector has seen a positive sign: Markit’s initial PMI for August was better than July’s. Here is why QE is far from certain in September.
- Markets react positively to report over ECB cap: The markets are abuzz over a report in Der Spiegel that the ECB intends to cap peripheral Euro-zone bond yields. After Spain finally submits its request (still awaited for more than two weeks), the ECB will buy bonds en masse, and will defend a preset yield like the SNB defends the EUR/CHF floor. Such a strong commitment will likely calm investors, as long as the ECB doesn’t have seniority. For its part, the ECB dismissed the Der Spiegel article, calling it “absolutely misleading”. Despite the ECB denial, the euro is up and Spanish bond yields are down.