The euro is falling on Greek deal hopes
EUR/USD is fallen 40 pips and the US dollar is at the highs of the day everywhere after a Guardian report suggesting a deal is close.
Three things are happening:
- The US dollar is benefitting from risk appetite because the Fed has highlighted international concerns and a resolution in Greece would give the Fed one more reason to hike
- Commodity prices are falling. The full story isn't just Greece. The drop in Chinese stocks is hurting commodities and oil is selling off
- Bonds are selling off after the 10-year US Treasury yield rose to the highest in two weeks
It's not the first time the euro has moved lower on good news from Greece. It's turned into more of a risk trade in general but this time, it's pure US dollar buying.
Others might argue that the negative comments about blackmail from Tsipras are hurting the euro but we've seen the euro drop before on signs of a deal. You only have to go back to Monday when the euro fell 2 cents as optimism reached a high point.
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