Euro slumps on Greece

After weeks of outperforming, the tide finally seems to have turned for the euro.

Euro
Source: Bloomberg

EUR/USD dropped back below $1.1300 as contradictory comments from Greece and EU set alarm bells off yet again. Greece feels bailout negotiations are in final stages while the EU says more time and effort is needed to bridge the gap. It seems Greece has not made enough progress to achieve a deal at the forthcoming Eurogroup meeting in Riga and this is a disappointment to the market. This resulted in Greek yields spiking and peripheral bond yields for Spain and Italy also spiked. Predictably the single currency was caught up in bond selloff and this trend looks like it will continue in the near term. From a price action perspective a short term uptrend support line has been in place since April lows and we are now on the verge of breaking this level. A close below 1.1300 would see a confirmation of this break and could lead to further near term weakness. The 23.6% retracement of the April to May rise kicks in at $1.1247 and this might offer some near term support.

 

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