Heading into the weekend, bearish pressure is keeping EURUSD down on the session ahead of a key austerity vote next week by the Greek government. Prime Minister Antonis Samaras is having to contend with defections from the socialist Pasok party as well as contention from other party’s involved in the current coalition government. As for now, estimates are now looking at a close vote, with the coalition expected to muster up around 153 votes. This is in comparison to a required 151 of the 300 seats in parliament to successfully pass the austerity bill.
The current bill is expected to enact $17.5 billion in further austerity cuts and would contribute to the unleashing of the next tranche of $40.1 billion in bailout funding for the Greek economy – which is expected to run out of operating cash by November 16th. A dead vote on the austerity measure would place significant pressure on the single currency, as a delay of disbursement by the EU’s Troika could technically place Greece in a sovereign default. Greek benchmark 10-year bonds are reflective of the sentiment, with the yield rising a little over 40 basis point to 18.18% in the last two days.
Technically speaking, the EURUSD has broken through the 1.2900 round figure support level, which has sustained near term consolidation over the last week. However, with price action now through the psychological figure, as well as violating the 1.2041-1.2255 ascending trendline, the bias has turned bearish for the major pair. Initial support targets are seen at 1.2803 October 1st session low, which is being reinforced by the 1.2746 38.2% fib support from the 1.2041-1.3171 bullish wave.
Check the report: Why Greece Is Still In The News by Richard Lee!