Forex Pros — The euro pulled back from a one-month high against the U.S. dollar on Monday, after ratings agency Standard and Poor’s said a proposed rollover of Greek sovereign debt may put the country into selective default.
EUR/USD hit 1.4512 during European early afternoon trade, the daily low; the pair subsequently consolidated at 1.4514, slipping 0.04%.
The pair was likely to find support at 1.4426, last Thursday’s low and resistance at 1.4695, the high of June 7 and a one-month high.
French lenders have proposed a plan to reinvest half of the proceeds from maturing Greek government bonds into new 30-year Greek bonds. The European Central Plan said that it supported the plan, as long as it was voluntary.
Over the weekend, euro zone finance ministers approved the next EUR12 billion installment of Greece’s bailout but warned that the indebted nation must expect significant losses of sovereignty and jobs.
The single currency remained supported by expectations that the European Central Bank will raise interest rates again at its monthly policy meeting on Thursday, after ECB President Jean-Claude Trichet said last week that the bank was in “strong vigilance mode.”
The euro was also lower against the pound, with EUR/GBP shedding 0.22% to hit 0.9015.
Also Monday, official data showed that producer price inflation in the euro zone declined slightly more than expected in May, on the back of cheaper oil prices.
Eurostat said that PPI declined by 0.2%, after rising by 0.9% in April. Analysts had expected the producer price index to decline by 0.1% in May.
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