All Trade Ideas and trading scenarios found on FX360.com are hypothetical. FX360.com has not placed these Ideas in a live trading environment. Forex Trading involves high risks, with the potential for substantial losses that exceed your initial deposit and is not suitable for all persons. Past performance is not necessarily indicative of futures results.

EUR/USD Under Pressure as Greek Deal Elusive

Last updated 1/30/2012 4:32 AM ET (GMT -5) 0 Comments - Add your comment

• Share this:

Boris Schlossberg

Director of Currency Research, GFT

Top Stories

• Euro slides as Greek deal fails to materialize
• EUR/CHF testing 1.2050
• Nikkei off -0.54% Europe off -1.00%
• Oil at $98.86/bbl
• Gold at $1727/oz.

Overnight Eco

• EUR German Prelim CPI (MoM) (Jan)
• GBP Halifax House Prices (MoM) (Jan)

Event Risk on Tap

• USD Core Personal Consumption Expenditure - Price Index (MoM) (Dec) expected at 0.1%
• USD Personal Consumption Expenditures (MoM) (Dec) expected at 0.2%

Price Action

• USD/JPY at 76.70
• AUD/USD slides to 1.0540 as risk sold
• GBP/USD down to 1.5660
• EUR/USD breaks 1.3150 as Greek talks still in doubt

Risk FX was under pressure as trading opened for the week as the deal between Greece and private sector investors failed to materialize over the weekend. The EUR/USD slid to a low of 1.3130 from a closing high of 1.3225 on Friday while Aussie drifted all the way to 1.0535 from 1.0650 as European equities declined by more than -1%.

Although reports over the weekend suggested that the two parties were close - agreeing on a 60% haircut and a coupon just below the 4% rate - no formal announcement has yet been made frustrating some market players who had been expecting a deal to be concluded.

Meanwhile Greek Prime Minister  Lucas Papademos said that unless the country’s international backers agreed to a new bail-out, Greece would be unable to pay off its loans and be forced out of the eurozone.

EU leaders will meet in Brussels tonight amid growing concern that Greece be unable to implement the austerity measures demanded by EU as a precondition of the latest package of financial support. Without that bail-out, Greece will be unable to repay €15 billion of loans due in March.

Over the weekend Germany suggested that a European commissioner should take effective control of Greek fiscal policy to ensure that the country implements key austerity measures. However, Evangelos Venizelos, the Greek finance minister, rejected that plan, saying it would undermine Greece’s “national identity and dignity”.

With little significant economic data on  the docket Greece remains the primary focus of the currency market and the two day EU summit which starts today will likely be preoccupied with plans to ring-fence the problem as policymakers attempt to contain the sovereign debt crisis in the region. The remains bolstered by the skew in positioning as shorts remain at record highs, but at the same time EUR/CHF continues to slide lower coming within a few pips of 1.2050 level as some investors clearly continue to hedge their bets.  As we noted earlier, “For now 1.3150 remains support as Middle Eastern buyer keep any selloff contained, but any further reports of delay could trigger a more significant downdraft with 1.3100 and even 1.3000 in view on any news of potential failure to arrive at a compromise.“

FX Upcoming

The information, including Commentary and Trade Ideas, provided on FX360.com should not be relied upon as a substitute for extensive independent research which should be performed before making your investment decisions. Global Forex Trading and FX360 .com is merely providing this information for your general information. The information and opinions presented do not take into account any particular individual’s investment objectives, financial situation, or needs. All investors should obtain advice based on their unique situation before making any investment decision and should tailor the trade size and leverage of their trading to their personal risk appetite. Any projections or views of the market provided by FX360.com may not prove to be accurate.

The views of the authors and analysts are not necessarily those of Global Forex Trading, its owners, officers, agents or other employees. FX360.com and the currency research team will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained on FX360.com. Global Forex Trading and the currency research team do not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.

Loading...

About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.