Technical Bias: Bearish
- EURUSD suffers fresh monthly lows, falling 0.25% to 1.0847.
- Greece more likely than ever to default on its loans, sources say.
- German consumer confidence reaches highest level in 13.5 years, according to GfK.
The EURUSD fell to new lows on Wednesday, as talks between Greece and the troika stalled, leading to speculation that Athens would likely miss a critical June 5 payment to the International Monetary Fund.
The EURUSD was trading at daily lows in the early New York session, falling 0.25 percent to 1.0847. The pair is trading at its lowest level since April 24, having declined nearly 2.5 percent over the past five days. The EURUSD faces immediate support at 1.0829. A break below that level would lead to a test of the 1.0786 region. On the upside, initial resistance is likely found at 1.0950 followed by 1.1028.
Greece Talks Continue to Stall
A stalemate over the future of Greece’s bailout program weighed on the euro on Wednesday. Talks between Greek and Eurozone officials broke down last week and were cancelled on Tuesday, according to a Greek senior official.
Last week German Chancellor Angela Merkel and French President Francois Hollande vowed to reach an agreement by the end of the month. Sources close to the negotiations say Greece and its Eurozone partners remain too far apart on an accord. That sentiment was shared by the IMF, which only last week dismissed rumours that a deal was imminent.
Greece faces a seemingly insurmountable payment schedule next month, including a €310 million payment to the IMF on June 5. With time running out, it appears more likely that Greece will miss its payment deadline, pushing it closer to default. Athens owes another €348 million to the IMF on June 12, followed by €581 million on June 16. A failure to pay interest to the European Central Bank on June 19 could be Athens’ riskiest bet yet, as the ECB is providing Greece with emergency liquidity assistance (ELA).
The ECB has left the ELA level for Greek banks at €80.2 billion, unchanged from a week ago.
German Consumer Confidence Surges
Despite ongoing concerns over Greece, German consumer confidence rose unexpectedly, reaching the highest level in 13.5 years. GfK’s forward-looking consumer confidence index rose to 10.2 in June from 10.1.
“Very strong domestic demand in Germany and the low rate of inflation are fuelling economic expectations and consumers’ willingness to spend,” GfK said in its monthly report.