About 24 hours after European leaders reached the aGreekment, and there are multiple problems weighing in.
EUR/USD remains under pressure below 1.10.
The deal consisted of 2 initial steps before talks about a third bailout could commence.
- Greece would have to approve a harsh reform package by Wednesday: There seems to be a lot of opposition within the governing SYRIZA party ranks. The criticism is not limited to the “Left Platform” hardliners. The parliamentary spokesman says there was a coup in Brussels, following the line of the trending #ThisIsACoup hashtag. Nikos Filis and Panagiotis Lafazanis are the most outspoken members.
- Greece would receive a temporary bridge loan: The loan that would precede the ESM bailout would be worth 10 to 12 billion euros. This bridge financing is apparently not so easy. One thought that was floated was to use money in the EFSM mechanism. That would be easy in terms of legal clauses, but charged politically, as it would put the UK on the hook. And this doesn’t go well in the UK.
- Schaeuble doesn’t let go: It seems that the plan of the German finance minister was to kick Greece out of the euro-zone and that this plan didn’t materialize due to Greece accepting the humiliating terms. He now suggests debt certificates for Greece, government issued IOUs. This basically paves the way for a parallel currency and a Grexit.
On this background, EUR/USD remains on the downside, trading under 1.10. Further support awaits at 1.0915, followed by 1.0820. Resistance awaits at 1.1050 and 1.1130.
Greek crisis – all the updates
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