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Home » Technical Analysis » Daily » EURUSD » Euro Drifts Lower as Greece, EU Resume Talks in Brussels

Euro Drifts Lower as Greece, EU Resume Talks in Brussels

Posted by FXTimes in EURUSD - February 16th, 2015 5:39 pm GMT

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Technical Bias: Neutral

Highlights:

  • EURUSD drifts below 1.14 on Monday as US pauses to observe President’s Day.
  • Greece, EU finance ministers meet in Brussels to discuss the future of Athens’ bailout program.
  • German finance minister Schaeuble pessimistic an early deal can be reached.
  • Morgan Stanley places the odds of Greece exiting the Eurozone at 20%.

The euro drifted lower against its US counterpart Monday, as Greek and EU finance ministers began another round of negotiations on the future of Athens’ €240 billion bailout program, raising concerns that another stalemate could force the Hellenic nation out of the Eurozone.

The EURUSD tumbled 0.4 percent to 1.1348 leading up to the Eurogroup meetings. The pair is testing the initial support of 1.1344. A break below that level would expose 1.1307, leading to a bigger reversal below the 1.13 level. On the upside, resistance is ascending from 1.1435.

Screenshot (107)

All was quiet in the US markets on Monday, as investors paused to observe President’s Day. Tuesday kicks off an active week for the US dollar, led by a deluge of economic data that features housing, industrial production, producer inflation and manufacturing PMI. On Wednesday the Federal Reserve will release the minutes of the January 27-28 FOMC policy meetings, giving investors clues about whether central bankers were warming to the idea of interest rate normalization. The Fed announced last month it would be patient in starting to raise interest rates.

Meanwhile, Eurozone finance ministers coalesced in Brussels on Monday to discuss the future of Greece’s bailout program. Talks broke down last week after Greece and its EU counterparts were unable to reach a political solution about Greece’s debt obligations. Greece’s newly appointed far-left government has vowed not extend the country’s bailout program, which is set to expire at the end of the month. A failure to reach an agreement before the deadline could force Greece out of the Eurozone.

According to Morgan Stanley, the likelihood of Greece exiting the currency bloc is 20 percent. The multinational investment firm said it is more likely that Greece goes back to the previous bailout program without a debt reduction. The odds of that happening are 55 percent. The likelihood that Greece follows a “staycation” scenario, which would involve no initial agreement, is 25 percent.

German finance minister Wolfgang Schaeuble has already expressed pessimism about an early deal.

“I’m quite skeptical. The Greek government has not moved, apparently,” he said as he arrived in Brussels.

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