After many hours, the finance ministers of the euro-zone and the IMF reached a deal to reduce Greece’s debt to 124% of GDP by 2020. Details are still to come.
As some kind of patchwork was already priced in, EUR/USD is rising only a bit, still trading under 1.30. There is some potential for rises in the Asian session, but Europeans could digest the deal in a different manner. Could we see a “sell the fact” response?
Update: Deal only on the framework, but not on the details, EUR/USD falls.
In addition: EUR/USD Close to Long-Term Downtrend Resistance
Update: EUR/USD crossed 1.30 and reached 1.3008. There’s still a lack of conviction.
Update 2: The pair retreated back to 1.2987. A press conference was scheduled for 23:00 CET, and it clearly hasn’t started on time. Other sources report that it is 23:00 GMT (midnight in Europe). It seems that this press conference has been postponed indefinitely.
Update 3: there are now reports that discussions are still ongoing. This could explain the drop.
Could the lack of details mean that there’s an agreement on the target of 124% in 2020, but no agreement on how to actually achieve it?
The IMF wanted 120% by 2020 and the Eurogroup wanted 120% by 2022. A series of patches was probably used in order to avoid more debt restructuring – losses for euro-zone governments.
Apart from the initial breaking news that a deal was done (from Reuters newswires), details are still missing at the time of writing. This is a bit strange. There were expectations for a mix of lower rates for Greek loans, redistribution of ECB profits, and a buyback program in one big Greek salad.
The dressing for the salad is some wishful thinking sauce. Who really knows what Greek GDP and Greek debt will look like in 2020?
Above 1.30, some resistance appears at 1.3050, followed by 1.31. The really strong resistance line is the top of the autumn range: 1.3170. Chances are low that the pair will challenge this level.
On the downside, 1.2960 provides minor support, with 1.29 immediately afterwards. More serious support is at 1.28.
For more levels, events and analysis, see the EUR/USD forecast.
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