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Greek countdown continues
The euro is pulling back losses from its overnight session – but the possibility of a Greek default still hangs over the single currency.
The Syriza party are still at loggerheads with the country’s creditors and the indebted nation has to make repayments to the International Monetary Fund on the 1 and 12 of May. Greece has a track record of talking tough right up until the deadline but eventually a compromise is reached. The harsh rhetoric out of Athens between now and then will keep pressure on EUR/USD.
Mario Draghi stated that Greek banks will remain eligible for emergency funding while they hold acceptable collateral, such as Greek government bonds, but if Athens were to renege this would be disastrous for the country. The bond markets are increasingly pricing in a default but it is not having the same impact on EUR/USD.
EUR/USD has been in an upward trend for the past week but additional gains will be difficult to achieve while political uncertainty hangs over Greece.
The 50-hour moving average is providing support at $1.0770 and the resistance at $1.08 is the target. If that is cleared the $1.0830 region will be brought into play. The 50-day moving average at $1.0865 seems out of reach for any rallies. A drop below the 50-hour moving average (MA) will bring $1.07 into sight, and if that mark is punctured the $1.0630/25 area will be on the radar.