Greece seeks a loan extension

The indebted nation has been granted emergency funding from the European Central Bank to keep its banks afloat, but now Greece is seeking an extension to the existing bailout.

Euro notes
Source: Bloomberg

EUR/USD dips below $1.14

The currency pair is back below the $1.14 mark as the Greek banking system has been cast a lifeline. However, the application to the bailout scheme still casts a shadow over the indebted nation. Greek politicians have being playing hardball with the ECB lately, but European policy makers may request new terms in exchange for an extension to the loan. The Syriza party has taken a firm line against Frankfurt, and if that trend continues it is likely to be knocked back for a loan extension, which will renew selling of EUR/USD.

It has been trading sideways in the recent sessions, and is currently encountering resistance at $1.14. If this mark is held, downside support at $1.1340 will be the target. A break above $1.14 will bring the upside resistance of $1.1440 into play.

Sterling going strong

The pound is making ground against the dollar as the mildly dovish tone of the Federal Reserve minutes last night kept sterling in a strong position. The US central bank is in no rush to raise interest rates as global issues such as Greece and Ukraine could derail the recovery in the US economy. The collapse in commodity prices is keeping US inflation on the low side and this is also holding back the Fed from a rate rise.

This morning, the UK released the CBI industrial order expectations for February. The reading came in at 10, easily beating the market consensus and previous reading of seven and four respectively. GBP/USD’s reaction was muted but it adds weight to the agreement that the UK economy is on the rise.

GBP/USD has consolidated in the $1.5450 region, and the upside target is $1.5503 which coincides with the 100-day moving average. To the downside, the initial target is $1.5420 and if that level is broken then $1.54 will be brought into play. 

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