Euro Awaits Greece Resolution IFO

Euro stabilises, while awaiting two key factors before potentially regaining the 1.2800 ceiling: 1) a clear resolution in Greece’s short-term funding and; 2) a much-needed improvement in Friday’s release of Germany’s November IFO sentiment survey after seven consecutive monthly declines.

Thursday’s release of the Eurozone November services PMIs (Eurozone, Germany & France) will also be crucial in determining sentiment, following modest gains in October’s figures.

Tuesday’s Eurogroup meeting and assessment of Greece’s reform progress will influence Germany’s decision on whether to pay Athens the €31.3bn installment due from last June, the €5bn from Q3 and the additional €8.3bn due in Q4.

German Finance ministry reiterates its opposition to suggestions from the German camp of the ECB (Weidmann) that a haircut on Greek public debt may be necessary. But how unsustainable Merkel’s position become before her parliament when her government insists there will be neither haircuts nor any further losses for taxpayers?

Japan’s currency extends damage due to political shake-up up while the US currency drifts lower on hopes of averting the fiscal cliff. Both USD and JPY remain the reflexive losers on any signs of Eurogroup resolution and pre-holiday deal from US Congress.

Risk-appetite trades continue to linger at the expense of the USD and JPY following optimistic comments from president Obama in averting the fiscal cliff, combined with chatter that Greece will be given the next tranche ahead of Tuesday’s Eurogroup meeting.

EUR/USD starts the week on a firm note, attempting to post two winning weeks in a row after three straight weekly losses. While the foundation remains comfortably underpinned above 1.2650 (100-day moving average), upside remains constrained at the key resistance of 1.2808 (200-day moving average), which previously acted as a key support throughout September and October. Thus, on the positive, EUR/USD continues to hold above the $1.26 support we deemed essential to shake-off additional bearishness, yet 1.2800-1.2810 may not be broken without: 1) a clear resolution to Greece’s short-term funding and; 2) an improvement in Friday’s release of Germany’s November IFO survey after seven consecutive monthly declines. Despite our anticipation for an eventual return to 1.3330′s later this quarter, we expect lingering downside to be retested near $1.2600′s.

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.