Article by ForexTime
The EUR/USD was hammered during the European trading session, triggering stops through 1.1350 before extending to an eight-day low at 1.1279. The move also marks a decisive break of the 50-day moving average at 1.1355. Market participants are still waiting on Greece’s negotiations with the Eurozone, while the US’s yield differential advantage pushed out back above 170 basis points versus the Bund.
It appears that Germany’s goal is to reach deal with Greece. A German Finance Ministry spokesman said Schaeuble’s goal is to reach a deal with Greece and that yesterday’s letter to the Eurogroup is a first step towards an agreement. Somewhat softer tones after yesterday’s initial rejection of Greece’s new proposal helped the Greek government to score some public relations points.
Greece on Thursday requested an extension not to the current bailout program, but the “Master Financial Assistance Facility Agreement”, which appears to be a variation of last week’s request for a bridge loan, albeit with some concessions.
The Greek government is once again playing with semantics, and once again it is managing at least at first glance to pass the blame for a potential impasse to Germany. Greece last week asked for a bridge loan running over 6 months in order to get time for a reworking of the agreement with its creditors. This was rejected by the Eurogroup of Finance Ministers, who made clear that there will be no credit without conditions and called on Greece to ask for at least a technical extension to the current bailout program.
While negotiations are going on, the Euro is feeling the pinch, and after nearly a month of consolidation is poised to take the next leg down. Short term momentum has turned negative as the MACD (moving average convergence divergence) index generated a sell signal. This occurs as the spread (the 5-day moving average minus the 13-day moving average) crosses below the 6-day moving average of the spread. The index moved from positive to negative territory confirming the sell signal. Target support is the recent lows near 1.1140.
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