EUR/USD and narrower Greek/German yield spreads are feeding off one another at the moment as the spread narrows to 420 bp. EUR/USD has bounced to 1.3360, perhaps on the notion that Funding for Greece, if asked for, could come at levels way below what Greece is paying now. Trichet opened the door to that idea at his press conference.
"Again, it is up to each government, but there is a minimum, which is that the interest rates, which would be shipped to Greece, would be at least the cost of the refinancing by the various governments concerned."
1.3375/80 is next resistance for EUR/USD.
