Good Euro news, but weak EUR

By commerzbank

Commerzbank analysts are watching the EUR/USD degrading its value even though there were in fact good news for the Eurozone: “the party leaders of the Greek governing parties, George Papandreou (Pasok) and Antonis Samaras (Nea Demokratia), submitted the demanded letters to the troika. They confirmed their commitment to the austerity measures even for the time after the elections”, wrote analyst Ulrich Leuchtmann, adding that Jean-Claude Juncker indirectly made clear that rumors about delaying the bailout for post-election are incorrect: “After a conference call of the Eurogroup, its President Jean-Claude Juncker declared that the decision about the bailout package for Greece would be taken this coming Monday and that the remaining savings which were not contained in Sunday’s parliamentary decision had been “identified”.

But there are many reasons for the weakening Euro: regarding the unknown identified savings; regarding the credibility and value of the letters of commitment in a post-election scenario where the two major parties become marginalized; regarding a never ending postponement of the bailout package.

With a bearish outlook, Leuchtmann concludes: “Fundamental weaknesses of the bailout policy are returning to the fore. This is putting pressure on EUR/USD. How far will this effect take the exchange rate?”

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