EUR/USD Rises on Greek Optimism, Spanish Bailout Speculation

EUR/USD turned bullish after the pair bottomed out at 1.2657. Investors became optimistic since Greece’s international lenders agreed to grant the country more time to fix its budget. Renewed hopes Spain will finally ask for a bailout had a positive impact on the pair as well. Meanwhile AAA rated Germany sold €4.3 billion of two-year bonds which paid no interest. In other words, German government was able to borrow with zero interest rate because investors prize the country’s strong fiscal position and highly liquid debt market.

International Monetary Fund Managing Director Christine Lagarde said Greece needs a lasting solution to its debt burden to avoid a prolonged crisis as Europe’s slowdown and U.S. fiscal problems dampen the economic outlook in Asia. Lagarde said The IMF expects a real fix for Greece that puts its debt on a sustainable path as quickly as possible,

On the other side of the Atlantic, the report released from the U.S. Commerce Department showed that Retail sales fell 0.3% in October. Report also showed that Retail sales excluding autos were little changed, today’s report showed. Another report from the Labor Department revealed that the producer price index dropped 0.2% last month. The August and September numbers were rather strong, and the earlier months were rather weak, so it is hard to see a pattern.

The Treasury Department said the U.S. government’s budget deficit widened in October, the first month of the new fiscal year, as President Barack Obama and Congress seek an agreement to lower future gaps and avoid the fiscal cliff. The deficit expanded 22% to $120 billion from a $98.5 billion shortfall in October 2011.

EUR/USD is trading at 1.2736 by the time of typing and for today resistances are located at 1.2775 and 1.2812. Support levels are 1.2703 and 1.2678.

GBP/USD is at 1.5842. Resistance levels are located at 1.5887 and 1.5915. Supports are located at 1.5831 and 1.5770.

USD/CHF is trading at 0.9449 by the time of typing and for today resistances are located at 0.9474 and 0.9502. Support levels are 0.9417 and 0.9380.

AUD/USD is trading at 1.0376. Resistances are located at 1.0400 and 1.0434. Support levels are 1.0355 and 1.0304.

The economic calendar is heavy today. French Prelim GDP numbers will be released at 06:30 GMT. Prelim German GDP numbers will be released at 07:00 GMT. Italian Prelim GDP numbers will be released at 09:00 GMT. UK Retail Sales data will be released at 09:30 GMT. EU Consumer Price Index figures will be released at 10:00 GMT. Philadelphia Fed Manufacturing report is due 12:00 GMT.