It has been a tumultuous week for investors as ongoing talks between Greece and its creditors failed to reach any material conclusion as deadlines came and went. The latest updates coming from eurozone officials hint at further delays, no surprise there, as European Commission President Jean-Claude Juncker announced that talks between Athens and its eurozone lenders would recommence soon but the onus would be on Greece to come up with an appropriate deal which satisfied its lenders.
For now though there doesn’t seem to be any alleviation of pressure and Greek PM Alexis Tsipras is fully aware of this, as funds are quickly depleted and households withdraw savings from banks if significant progress isn’t made soon it’s only a matter of time before the indebted nation faces the very real possibility of default. However, with the IMF already quitting the negotiations in Brussels yesterday all eyes are on Athens to come up with a tangible deal before the end of the month and with each day that passes the likelihood of a Grexit increases.
Despite tensions rising that have plagued eurozone investors for many months now, as Greece a missed debt repayment deadline to the IMF last week which culminated in the IMF pulling out of negotiations just yesterday, the euro has been relatively well supported this week. The single currency weakened for a second straight session today but still remains on track to finish the week higher, adding a second straight week of gains against the dollar. Near term support around the 100 day MA towards 1.1000 remains firm as the single currency trading around 1.1180 at the time of writing. Having lost almost 18% against the dollar over the past twelve months it seems market participants have already factored in their concerns regarding Greece’s spiralling debts and while we did see the euro trade towards 1.0500 against the dollar in March and April it seems buying as it approaches parity with the dollar is an attractive proposition for many investors judging by the strong rebounds off this level.