Weekly Forex Markets Review

Euro Slips on Greece

Just when everyone believed a Euro bailout for Greece was a done deal the market was surprised by the German´s apparent U turn. The German government appear to have decided that planned aid for Greece was illegal and have stated the IMF should be involved financially not just in an advisory capacity.
What seems to have spooked the market more is the lack of unity and clarity. In the other camp from Germany are France the ECB and EC president Barroso, who has called for immediate help to be announced.

This weeks EU summit in Brussels has taken on more importance and the Greek PM Papandreou has set this as a deadline for leaders to complete some aid package.
One suspects the Germans are rightly concerned of setting some dangerous precedents which other indebted EU members may well follow in the months or years ahead.

The upshot was the Euro weakening almost 2 per cent against all but Sterling and having touched 1.3800 early in the week finished at 1.3525. For the time being The EUR/ USD has moved back to the lower end of the recent range. It remains to be seen if there is potential to push below the large resistance just above 1.3400 at this stage. Equity markets have continued to behave themselves but seem to lack much to push them on further at this stage.

Sterling which benefited early in the week from better than expected employment data, ( almost reaching 1.54 USD) eventually succumbed to the price action of the Euro finishing the week at USD 1.5015.

The Euro/US dollar has now been trading in a 3 per cent range since the beginning of February and should that break it will no doubt increase volatility.