Technical Bias: Bearish
- EURUSD declines 110 pips to 1.0686, a 3-week low.
- Greece confirms €450 million loan payment to IMF.
- AFEX Markets Forecasts parity for the EURUSD.
The EURUSD pulled back sharply on Thursday, falling below a key support level and exposing parity once again, as Greece narrowly avoided loan arrears by making a crucial payment to the International Monetary Fund.
The EURUSD hit new session lows in US trade, declining 110 pips to 1.0674, its lowest level since March 20. A close below 1.0686 exposes 1.0608 as the next support level. On the upside, initial resistance is likely found at 1.0858.
The euro was under pressure after Greece confirmed it had made a crucial €450 million loan payment to the IMF. The payment buys Athens time to negotiate a long-term agreement on repaying its €240 billion bailout. Eurozone finance ministers have already agreed to extend Greece’s bailout program, but will not release the next loan tranche until Athens puts forward actionable economic reforms.
The Greek government tabled reforms last week, providing detailed plans to curb tax evasion and fraud.
The cyclical decline of the EURUSD suggests the pair may be facing a bigger downside. According to latest forecasts from AFEX Markets, a London-based foreign exchange consultancy, the EURUSD could easily fall to parity for the first time since 2002.
The US dollar made a sweeping advance in the wake of the March FOMC policy minutes. The US dollar index, a trade-weighted average of the greenback against a basket of six currencies including the euro, climbed nearly 1 percent to 98.87.