EUR/USD Holds Ground as Greece Begins Debt Repayment

greece no exit image source
greece no exit image source

The EUR/USD gained modestly in Monday’s European session, as Greece began repaying its debt to the International Monetary Fund and European Central Bank, while Greek banks reopened for the first time in three weeks.

The EUR/USD traded within a narrow range Monday, rising to a high of 1.0868 in Europe. The pair would subsequently consolidate at 1.0841, advancing 0.1%. Key support levels for the EUR/USD include 1.0820, 1.0790 and 1.0745. On the upside, key resistance levels include 1.0860, 1.0890 and 1.0920.

The EUR/USD lost 1.5% last week after United States Federal Reserve Chair Janet Yellen signaled to Congress that interest rates would begin to rise this year. The dollar index closed at nearly three-month highs last Friday. The dollar index was up another 0.1% to 98.00 in Monday’s New York session.

The Greek government has begun repaying international creditors, the country’s financial ministry announced on Monday. Athens paid back €4.2 billion to the ECB and €2.05 billion in arrears owed to the IMF. The country also made a €500 million loan repayment to the Greek central bank.

Greece is repaying its bills using a €7.16 billion bridging loan it secured last week after agreeing to a new Eurozone bailout plan. The deal promises to dole out €86 billion over three years in exchange for tough economic and financial reforms.

Meanwhile, Greek banks reopened after being closed for three weeks, but maintained their strict €60 withdrawal limits. The limits were imposed after billions of euros were withdrawn from the country’s banks at the end of June.

In economic data, German producer inflation declined unexpectedly in June, the Federal Statistics Office reported. The producer price index declined 0.1% in June and was down 1.4% from June 2014. A median estimate of economists called for no change in June.

The United States had no major economic data releases scheduled for Monday. On Wednesday the National Association of Realtors will report on June existing home sales. Separately, Markit Economics will report on July services PMI. On Friday the Department of Commerce will report on new home sales for July and Markit will release manufacturing PMI.

The Eurozone has a light release schedule this week. The most urgent releases are scheduled for Friday when Markit reports on German and Eurozone PMIs.