At an unusual timing, the European Central Bank reached a conclusion that it cannot assume a successful conclusion of the talks around Greece. In one week’s time, on February 11th, it will cease to accept Greek government debt as collateral. Apparently the talks between the new finance minister of Greece, Yanis Varoufakis and ECB Mario Draghi earlier in the day were not so “fruitful†as initially reported.
EUR/USD falls to 1.1333, to the previous range before the comeback.
Earlier in the day, Varoufakis said that he is the finance minister of a “bankrupt country“. Well, the ECB seems to listen.
This is very troubling for Greek banks: they have a week to find other collateral. The ECB does continue to provide these banks, that already suffer outflows some relief via the Emergency Liquidity Assistance (ELA), so there may be some silver lining here.
Nevertheless, the euro does not like this and perhaps sees it as an ultimatum – the Frankfurt based institution is playing hardball with Greece.
More: EUR/USD: 15 Big Figures Down Ahead; Fed Delay Risk – Barclays
Here is the chart. The pair was already below the previous highs that followed the USD sell-off, but the ECB’s bomb sent EUR/USD below the November 2003 line of 1.1373.
Support is found at the resistance line seen earlier in January, at 1.1290.
