EUR/USD Dips Into 6 Month Lows as Greece Faces Payment
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EUR/USD Dips Into 6 Month Lows as Greece Faces Payment

EUR/USD dipped into low waters, at levels last seen on March 11th. It temporarily breached the swing low of 1.3838 seen in mid June. Trichet’s soft tone yesterday and increasing worries about Greece are the main reasons for this slide.

A failure in a Greek auction increased the prospects of a freeze in payments in mid October. Will the break be confirmed, and will this turn into an avalanche? Or will it bounce from here?

Update: EUR/USD continues lower. This is more than a dip.

The situation in Greece is getting worse from day to day. There is a growing chance that the country will run out of money on October 17th when it is expected to be short of 1.5 billion euros, without the next tranche of aid.

A small T-bill auction failed in a rare event, as  Greek newspaper reports:

The prospect of a freeze in payments appeared even more serious on Thursday, after Greek commercial banks failed to cover the sum of 300 million euros of supplementary, noncompetitive bids for Tuesday’s auction of T-bills, providing only 155 million. The shortfall is interpreted as a clear message by banks to the government that they are unwilling to fund future issues of T-bills.

EUR/USD dipped to 1.3834, under the June low of 1.3838 before pulling back to 1.3850. Further support is at 1.3750, followed by 1.3630. Serious resistance is at 1.3950.

For more on the euro, see the euro dollar forecast.

Yesterday, Trichet finally acknowledged the slowdown. The ECB now sees downside risks to growth and no inflation risks. This is a major change. During the press conference, the euro fell one range. The move was extended later on.

Yohay Elam

Yohay Elam

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 a 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.