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11 May 2015
Greek default risk heightens – MP
FXStreet (Barcelona) - Dean Popplewell, Director of Currency Analysis at Market Pulse, comments that today’s Eurogroup-Greece talks have heightened the concerns about Greece’s banking system, and further adds about the potential impact on EUR/USD as the previously seen yield support diminishes.
Key Quotes
“The EUR starts this week on the back foot as nerves have convinced some longs to liquidate ahead of today’s Eurogroup meeting. Renewed concern over Greece’s future in the eurozone will always produce headwinds for the euro.”
“No agreement is seen on Greece at this time, but European Union members are expecting progress to be evident in the negotiation process. The talks between the Greek government and its international partners are entering a crucial phase, overshadowed by a precarious fiscal situation, heavy debt redemption, and concerns about the stability of Greece’s banking system.”
“A majority of the market expects a deal to be reached, but the failure to reach an agreement in the coming weeks could firmly put Greece on the Grexit path.”
“With the fixed-income market leading the forex moves of late, the EUR bull will be looking toward the rates market for support. A pleasant surprise for EUR long positions is that the two-year U.S.-German yield spread has narrowed -5 basis points since Friday’s jobs report, and with 10s at +158 basis points, they are in -3 basis points today and remain close to last week’s +152 basis points low.”
“The EUR bear is required to break €1.1135 support with momentum before pointing to further losses toward €1.1055 and €1.0850.”
Key Quotes
“The EUR starts this week on the back foot as nerves have convinced some longs to liquidate ahead of today’s Eurogroup meeting. Renewed concern over Greece’s future in the eurozone will always produce headwinds for the euro.”
“No agreement is seen on Greece at this time, but European Union members are expecting progress to be evident in the negotiation process. The talks between the Greek government and its international partners are entering a crucial phase, overshadowed by a precarious fiscal situation, heavy debt redemption, and concerns about the stability of Greece’s banking system.”
“A majority of the market expects a deal to be reached, but the failure to reach an agreement in the coming weeks could firmly put Greece on the Grexit path.”
“With the fixed-income market leading the forex moves of late, the EUR bull will be looking toward the rates market for support. A pleasant surprise for EUR long positions is that the two-year U.S.-German yield spread has narrowed -5 basis points since Friday’s jobs report, and with 10s at +158 basis points, they are in -3 basis points today and remain close to last week’s +152 basis points low.”
“The EUR bear is required to break €1.1135 support with momentum before pointing to further losses toward €1.1055 and €1.0850.”