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Euro retreats ahead of emergency EU summit

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Euro retreats ahead of emergency EU summit fxcommentThe euro dropped against the U.S. dollar and other major currencies ahead of en emergency EU summit on Monday night that is likely to determine the fate of Greece.

Some investors preferred to remain sidelined before today’s summit, pushing the euro lower following its advance versus the green currency over the previous three weeks.

 

Fears

Greek banks opened normally on Monday despite deposit withdrawals 4.2 billion euros between last Monday and Friday.

The central bank of Greece warned last week of “difficult day” on Tuesday if the summit ended without a deal, according to Reuters.

In case Greece could not reach a deal, the European central bank will stop its assistance since it is forbidden to let the Bank of Greece to lend insolvent banks.

The Greek government has less than two weeks to repay a loan of 1.6 billion euros to the IMF, where any delay means default.

“It will be in default, it will be in arrears vis-a-vis the IMF on July 1,” IMF Managing Director Christine Lagarde said on June 18. “There is no grace period or two-month delay.”

Thousands of protesters went to streets of Athens last night to keep up the pressure on Greece’s government in order not to accept reforms demanded by creditors.

Good signs

Greek Prime Minister had delivered a last-minute proposal over of the weekend that was welcomed by the European Commission.

The new offer “was a good basis for progress at tomorrow’s Euro summit,” European Commission spokesman Martin Selmayr said.

Stocks around the world rose on hopes Greece would reach a deal with its creditors tonight.

EURUSD

As of 09:38 GMT, the EURUSD traded lower around 1.1344 after posting a low of 1.1310, where it continued to face downside pressure after hitting a peak of 1.1434 on June 18.

For today, the pair may find the nearest supports at 1.1296 then 1.1240, while resistances are depicted at 1.14 then 1.1450.

The euro gained around 1.30% versus the U.S. dollar last week as the Federal Reserve’s dovish remarks pushed the dollar lower.

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Ahmed Mamdouh Ahmed Mamdouh, Co-Founder and Head of English Fundamental Analysis at FXComment.com, with 7 years of experience in the financial markets. Mamdouh holds a Master’s Degree in Economics from The American University in Cairo and a Bachelor Degree in Economics from The Faculty of Economics and Political Science, Cairo University.

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