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Greece deal might provide EUR/USD temporary relief – BTMU

FXStreet (Barcelona) - Lee Hardman, Currency Analyst at Bank of Tokyo-Mitsubishi UFJ, sees potential relief for EUR/USD in the near-term if a Eurogroup-Greece deal is reached, but ECB’s purchases are likely to keep the long-term bearish outlook intact.

Key Quotes

“It has been reported that Greek Prime Minister Tsipras has urged an acceleration of talks with the country’s creditors aiming to strike a deal by the end of this month. Greek Prime Minister Tsipras met yesterday with German Chancellor Merkel, French President Hollande, and European Commission President Jean-Claude Juncker on the side lines of a summit in Brussels.”

“Greek Prime Minister Tsipras stated specifically that “I’m very optimistic we are closer than before to an agreement”.”

“German Chancellor Merkel provided some reassuring comments as well following yesterday’s summit stating that “everything must be undertaken to prevent “Greece running out of money. The meeting with Greek Prime Minister Tsipras was described as “constructive”.”

“In contrast, European Vice President Dombrovskis has struck a more cautious tone stating that there had been little progress and he was getting worried about Greece’s financial position. He added that “it will apparently take some more time” beyond the end of April to reach an agreement, and that “there is still a lot of work to be done” The EU needs “to see real progress in implementation in order to complete the program review”.”

“We view the risks posed to the euro from ongoing developments regarding Greece as largely asymmetric in that a default by Greece would likely reinforce downward pressure on the euro in the near-term, whereas reaching an agreement to provide financing for Greece is unlikely to result sustained euro upside. At best it will provide only temporary relief for Greece.”

“The weaker euro is also mainly the function of the ECB’s aggressive monetary easing which will remain in place.”

Germany IFO - Expectations below expectations (104.5) in April: Actual (103.5)

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