Euro-zone finance ministers will shortly begin their meeting to discuss the next Greek aid tranche. Following last week’s unexpected failure to come to an agreement, people aren’t exactly sure what to expect from today’s meeting. The Finish Finance Ministry already said that a decision on Greece will be made at latest at the December 3 meeting of the Euro-group. On the other hand, ECB’s Constancio said he expects an agreement on Greece today.
The next bailout tranche should be at least 31 billion Euros, and the meeting today may loosen the 2020 debt to GDP target to 124% from 120%. An agreement to release the bailout fund or relax some of the Greece debt requirements, is likely to boost the Euro against the US Dollar, and if the meeting doesn’t come to any agreement, then the Euro could decline.
Additionally, ECB’s Constancio said today that the central bank expects Spain to ask for aid and trigger OMT bond purchases. Constancio also said that Spain has completed the requirements to receive aid from the ESM for bank recapitalization. EURUSD saw a small bounce towards 1.3000 in currency markets following his comments.
The Euro could continue to see resistance around 1.2990 against the US Dollar, where the pair set a 3-week high in Friday’s trading. Support could be provided by a support line around 1.2824.
In economic releases, the Italian consumer confidence index was reported at the lowest level ever in November. The GFK German consumer confidence survey will be released at 12:00 GMT, 6.2 is expected.
EURUSD Daily: November 26, 2012
--- Written by Benjamin Spier, DailyFX Research