Euro dollar is falling to new lows as uncertainty mounts around Greece. The pair currently stabilized around low support, but this seems quite fragile.
The Greek government just approved a new budget. Good news? Well, the devil is in the details and skepticism is heard even from the Greek finance minister.
The adjustments for the 2011 budget consists of a 8.5% deficit, still higher than the 7.6% required by the EU / ECB / IMF troika. This comes after imposing a property tax and after pledging to put 30,000 private workers in a reserve pool, one step before letting them ago. The budget for 2012 isn’t too hopeful either.
In addition, the Greek finance minister admitted that the budget is ambitious. The Greeks have made big promises and under-performed. So at least they are accepting reality. But this doesn’t help the euro.
New voices calling for an orderly default in Greece are heard everyday. The finance minister of Slovakia said that Europe should be prepared for a Greek default. A member of Angela Merkel’s ruling party in Germany said that Greece is practically bankrupt.
The general assumption is that the troika will twist and eventually release the overdue tranche of aid of â‚¬8 billion, but that this will buy time before Greece will hopefully default – at the beginning of November.
As we know, currencies move faster than politicians. EUR/USD lost the round number of 1.33 and dropped just under 1.3240. It then recovered and is currently holding on to support at 1.3250.
Further support is at 1.3180, followed by 1.3080. Minor resistance is at 1.3313, followed by 1.3360.
For more on the euro, see the euro dollar forecast.