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Euro dollar  is quite stable in range. Different reports about the participation rate in the Greek bond swap paint a confusing picture. The current, movable deadline, is Thursday for the bond swap results and Friday for the approval. The unmovable deadline of Greek bond payments is getting too close. A credit event hasn’t been triggered yet, but is certainly on the cards if Greece will indeed  exercise the CACs.

Here’s an update on technicals, fundamentals and what’s going on in the markets.

Update: EUR/USD fell on growing concerns regarding the Greek situation and lost the 1.3150 line.

EUR/USD Technicals

  • Asian session: Yet another quiet session.
  • Current range:  1.3150 to 1.3212.EUR/USD Chart March 6 2012
  • Further levels in both directions: Below:   1.3150, 1.3050, 1.2945, 1.2873, 1.2760, 1.2660 and 1.2620.
  • Above:   1.3212, 1.3280, 1.333, 1.3430, 1.3486, 1.3550 and 1.3615.
  • 1.3212 is getting stronger as resistance
  • 1.3150 isn’t strong support. 1.3050 is stronger.

Euro/Dollar steady in range  – click on the graph to enlarge.

EUR/USD Fundamentals

  • 10:00 Euro-zone Revised GDP. Exp. -0.3%. Actual -0.3%.

For more events later in the week, see the  Euro to dollar forecast

EUR/USD Sentiment – Details of hurdles

  • Greek PSI in focus: The  bond swap, in which private bondholders “volunteer” to lose around 74% of the bond value promised by Greece, is planned to end on March 8th. A participation rate of under 75% will be extremely problematic, as the Collective Action Clauses would not be triggered and the whole deal will fall. Greece says it is getting good signs, but might have to use the CACs, making the it less voluntary. Some German and French banks made public their intention to participate, but other sources say the participation rate is low. It seems that whole deal depends on this.
  • Another final assessment: Hopefully assuming that the bond swap will go through, the final approval for the release of EU funds is planned for March 9th or 12th. Euro-zone finance ministers noted that Greece made a lot of progress. Nevertheless, they are waiting for the bond swap to finish and for a “final assessment”. ThThe March 20th deadline is getting too close. Here are  5 hurdles that could further delay or cancel the bailout.
  • Third bailout?: A report about a troika report says that Greece will need a third bailout by 2015, worth 50 billion euros, as Greece won’t be able to return to the markets by then.
  • ISDA Doesn’t Call Default: The international body responsible for deciding if there was a default or not decided not to declare a credit event for now. They  left the door open  to more questions and a different decision, and noted the “evolving situation” in Greece.
  • German ministers wants Greece to go: In a passive aggressive move, German finance minister Wolfgang Schäuble said that he will  respect countries who want to leave. Greece doesn’t want to leave, but there’s a growing notion that it is pushed to declare bankruptcy. This joins the words of  Hans-Peter  Friedrich that said he would advise Greece to leave the euro-zone and said that Greece should be “made an offer it can’t refuse” to leave.
  • Spain defies the EU: The Spanish government  lowered growth forecasts  and presented a budget with a deficit of 5.8%, higher than the EU target of 4.4%. Pessimistic forecasts are good news, but the high deficit won’t go well in austerity focused Brussels.
  • ECB LTRO II: Around 800 European banks  grabbed nearly 530 billion euros. They are now better equipped for a crash and European leaders can feel safe and  let go of Greece. The side effect was that banks accumulated  sovereign  bonds as collateral for the operation.
  • Plan B still possible: Despite the deal, things, such as the IMF contribution or more Greek misses, could still go wrong. There are reports about plans made in Germany and the US for a  Greek bankruptcy on March 23rd, when Athens will raise a white flag and a bank holiday will be announced. Here are  5 more ominous signs that Greece is pushed to the corner.
  • US Housing still sensitive:  The sensitive housing sector has shown minor improvement via the existing home sales figure  . Single family houses are still struggling, as well as foreclosures. The trend of falling jobless claims, at least in the 4 week moving average continued.
  • OK Employment Report expected: Friday’s Non-Farm Payrolls could be decisive for QE3. Various important indicators lead up to the NFP. In Bernanke’s latest testimony, he  said that the improvement in employment surprised him. This was enough to boost the dollar, big time. The important services sector PMI exceeded expectations but the employment component showed slower growth. This is usually the best indicator towards the report.
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