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EUR/USD: agenda for May 11-15

Elizaveta Belugina

EUR/USD rose to 1.1390 supported by the rising German bund yields before its advance paused as US labor market data came out better than some had feared.

Let’s see what the coming week is preparing for EUR/USD. On Monday, May 11, the euro area’s finance ministers will once again meet to discuss the Greek question. Although in April this date was referred to as the deadline for making decision about granting Greece the final 7.2-billion euro tranche of the bailout money, the recent comments from the European authorities show that a deal between the troubled nations and its creditors remains unlikely at this point.

In the past week Greece has managed to make a 200-million-euro interest payment to the International Monetary Fund. However, paying another 750-million-euro to the IMF on Tuesday, May 12, may be very difficult. On Friday, May 15, Greece faces a T-bill redemption for 1.4 billion euro – this is not a problem, because the nation can just rollover such debt. The payment to the IMF is trickier: if there’s no deal at the Eurogroup the day before, Greece will have to choose between paying the IMF and paying public sector wages and pensions. All this creates negative risks for the euro.

On Wednesday watch the releases of the euro zone’s flash Q1 GDP data. All in all, there’s a gradual improvement in European economic fundamentals and this should be reflected in the release and support the euro.

A close below May 1 high at 1.1290 and below the 100-day MA at 1.1240 will be a negative factor. Support is at 1.1100, 1.1050 and 1.0905. This support looks strong. A close above these levels will open the way to 1.1515/30 (50% Fibo of the December-March decline, February high), although the Greek uncertainty that will return to focus will make the ascent of th single currency more difficult.

 

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