EUR/USD Starts The Week Lower on Greek Default Worries

Euro dollar began the week sliding below last week’s lows. An emergency meeting will be held later in Europe to discuss the options for Greece, and some kind of default becomes a option. Long term uptrend support may be tested as trading develops.

EUR/USD is now around 1.4200, just below the trough of 1.4205 seen last week. This is very early trade. When the Europeans join in, it can accelerate and challenge support.

Significant support is found at at 1.4160. This was an important line in the past. In addition, uptrend support, that began in mid May, is waiting at 1.4155 today. It will get closer in the next days. Click the image to enlage.

Further support is found at 1.4120, 1.4030 and 1.3950. Resistance is at 1.4220, 1.4282 and 1.4375. For more levels and events, see the euro dollar forecast.

Reasons

After the huge sell off on Friday, an emergency coordination summit was summoned in Brussels. The finance ministers, as well as ECB president Jean-Claude Trichet and other senior officials will discuss the situation. This doesn’t look good.

Officially, Italy is not on the cards, but the third largest country is in deep trouble, politically and economically. Italy, as well as Spain, could face a downgrade. They are the third and fourth largest countries in the euro-zone. Each one, on its own, is too big to bail.

The Dutch finance minister already began accepting a Greek default last week. Now it seems that he’s not alone. The rating agencies won’t put their stamp on any complicated and sophisticated French plan. The leaders will have to accept some kind of default, despite Trichet’s stubborn attitude towards the issue, and his stubborn attitude towards the whole continent with his rate hike.