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Market Analysis

Home » Featured » EURUSD Reverses Gains as Greece Upholds Red Lines

EURUSD Reverses Gains as Greece Upholds Red Lines

Posted by FXTimes in Featured - May 7th, 2015 1:24 pm GMT

Greek finance

Technical Bias: Neutral

Highlights:

  • EURUSD reverses gains to trade around 1.1280 in New York session.
  • Greek government sticking to “red line” campaign promises, vowing not to concede to creditors’ demands.
  • US initial jobless claims hold near 15-year low.

The EURUSD reversed its gains on Thursday after the Greek government vowed to stick to its electoral campaign promises, a sign Athens was not prepared to make concessions to its creditors less than a week before a crucial Eurogroup meeting.

The EURUSD extended its gains to 1.1395 in the European session, the highest since mid-February. It quickly reversed those gains later on in the day, plunging more than 100 pips to 1.1263. The EURUSD was consolidating at 1.1280 in the New York session, down 0.6 percent. Initial resistance is found at the psychological 1.14 level. On the downside, initial support is located at 1.1224.

 

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Greece to Uphold Campaign Promises

Greece announced on Thursday it would not make concessions to its Eurozone partners concerning key campaign promises including pensions and the minimum wage.

“We won’t go beyond the limits of our red lines. It’s clear that we cannot cut pensions,” said government spokesman Gabriel Sakellaridis. “When you negotiate, there should be mutual concessions.”

Creditors are withholding €7.2 billion worth of bailout aid until Greece shows credible signs of implementing economic reforms, such as trimming the public service and privatizing of state assets.

Greece and its creditors are reportedly inching closer to an agreement just four days ahead of next week’s Eurogroup meetings. Both sides are looking to table a framework for final ratification by European finance ministers next week. Talks with the International Monetary Fund (IMF) and European Union (EU) will continue through the weekend.

German Factory Orders

German factory orders rose in March after back-to-back declines, a sign Europe’s largest economy was poised for a rebound in the second quarter.

Factory orders increased 0.9 percent after declining at the same rate in February. A median estimate of economists forecast a gain of 1.5 percent.

Compared to March 2014, factory orders were up 1.9 percent, official data showed.

US Jobless Claims

US jobless claims rose modestly last week, remaining close to 15-year lows ahead of a crucial nonfarm payrolls report on Friday.

Initial jobless claims increased 3,000 to 265,000 in the week ended May 2, the Labor Department said on Thursday. That was well below the consensus forecast of 280,000.

Claims have been below 300,000 for nine consecutive weeks, signaling continued strength in the labour market.

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