Euro Gained After Germany Approved A €44 Billion Aid For Greece

Euro Gained After Germany Approved A €44 Billion Aid For Greece

For the 24 hours to 23:00 GMT on Friday, EUR rose 0.11% against the USD and closed at 1.2986, after Germany's Parliament voted by 473 to 100 to give the green light to the release of €44 billion ($56.9 billion) in aid to Greece. The German Chancellor, Angela Merkel reportedly told a newspaper that the country would be willing to consider a write off of Greek debt if Athens can rely on its own revenue and cease borrowing. On Sunday, German Chancellor Angela Merkel stated that Germany has not ruled out a so-called “haircut”, or write-down, on Greek debt in the next few years.

Additionally, investor sentiment was also boosted after the European Central Bank (ECB) President, Mario Draghi, stated that budgetary consolidation in the Euro-zone would have a short-term economic impact but the Euro recovery would come in the second half of 2013. He further expressed satisfaction over the Greek deal and affirmed that the deal would help Greece to stay in the Euro-zone.

Meanwhile, on Saturday, the European Central Bank's Executive Board member, Benoit Coeure, stated that there should be a closer political union that can deeply engage euro area citizens.

On the economic front, Euro-zone's unemployment rate rose to 11.7% in October, compared to a rate of 11.6% in September. Meanwhile, the annual inflation, as measured by the harmonized index of consumer prices (HICP) eased to 2.2% (YoY) in November, from rate of 2.5% in October. Separately, retail sales in Germany dropped 2.8% (MoM) in October, against the expectations for a 0.4% fall and after a 0.5% gain in September. In France producer price inflation rose 2.9% annually in October, in line with market expectations, while consumer spending fell 0.2% (MoM) in October.

In the US, the ISM Chicago's business barometer rose to a reading of 50.4 in November, compared to a reading of 49.9 in October. Meanwhile, personal spending in the US decreased by 0.2% in October, after rising by 0.8% in September.

In the Asian session, at GMT0400, the pair is trading at 1.3039, with the EUR trading 0.41% higher from Friday's close.

The pair is expected to find support at 1.2989, and a fall through could take it to the next support level of 1.2939. The pair is expected to find its first resistance at 1.3068, and a rise through could take it to the next resistance level of 1.3097.

Investors now eye the French, German and the Euro-zone's Markit manufacturing PMI. The construction spending in the US is also likely to receive increased market attention.