It seems that the leverage that Greece has over its partners is working: according to reports, the EU is offering Greece an extension of the current program until the end of the year, and then a third program will have to be discussed.
Die Zeit says some funding will come from the ECB (which is reluctant) and that the new deal may not include the IMF. So, it seems that Merkel is saving herself and also Greece on her own. However, the story is only 4 paragraphs long. The initial reaction has been positive for EUR/USD but it then turned down.
The ECB will help in two ways:
- 10 billion from the ECB’s profits on Greek bonds will be used to refinance Greek banks.
- T-Bill limit will be raised.
Now, a diplomat in the Eurogroup meetings in Luxembourg denies this proposal as daydreaming.
In addition, there is a lot of confusion regarding a Greek proposal: Greek finance minister Yanis Varoufakis said he tabled a 5 page proposal but source close to Chancellor Merkel said she knows only of a proposal from the creditors.
EUR/USD shot higher only to fall. The pair went as high as 1.1436 only to crash below the double top it worked so hard to break.
The critical level is 1.1375. This is the double top that was fought upon and was won thanks to a second wave of USD selling following the dovish Fed message.
However, there are still enough reasons to sell the euro, with or without the Greek crisis.
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