EUR/USD is trading at 1.0750, in the middle of the narrow 1.07 to 1.08 range and bang in the middle of the wider 1.0450 to 1.1050 wider range.
Headlines about negotiations between Greece and its creditors and everything Greece related have dominated the headlines, with optimism and pessimism coming and going.
Optimism
- Greek finance minister Yanis Varoufakis said that there are clear signs of convergence and they will reach a deal (even if it will not necessarily be reached on Friday).
- Irish finance minister Noonan also said there has been some progress on Greece. A decision is expected by May.
- Better press for Greece: The highly regarded Financial Times has published an article “debunking Greek mythsâ€, and this consists of a more positive view for the country. This has influence on mainstream politicians.
Pessimism
- The ECB is reportedly considering cutting collateral allowed by Greek banks. This can be seen as a negotiation tactic.
- There is talk about capital controls in Greece: This talk is denial that such measures are planned, but the mere talk could accelerate the exodus of funds from the debt-stricken country.
- The government in Athens has released a decree calling for all local government funds to be parked with the central bank, a sign seen as desperation as the credit crunch intensifies.
EUR/USD
Band in the middle best describes the situation, as stated beforehand. When the trade ranges narrow down, this is usually followed by an explosion. But to which direction?
Significant US data, which was weak last week and helped the pair, is released only tomorrow and on Friday. So is euro-zone data, which seems to have less influence.
It will probably be more Greek to all of us. More: A Greek default within the zone – the worst for EUR – SocGen
Here is how it looks on the chart:
