The euro gave away all gains it managed to make this week after Greece failed to convince traders it will be able to raise sufficient funds from its bond auctioning program to cover its debt payments. Chances that the Greek government will be forced to use the EU/IMF bailout package proposed last week are increasing.
According to government officials, Greece did not raise the expected amount from its newly issued dollar-denominated bond geared at U.S investors.
The 10-year Greek treasury bonds fell for the third day in a row on Thursday and the yield premium increased to the point where the cost of borrowing from investors could be higher than that of the EU package.
European leaders agreed on a €45 billion loan package at 5% interest rate to prevent a Greece default. However, the Greek government would rather raise the money itself to prevent an extension or even a strengthening of austerity measures.
The EUR/USD dropped from 1.3575 to reach a 1.3520 low in the London session.
Other worries contributed in the downmove. China’s possible monetary policy tightening, cautiousness ahead of set of U.S data, and the euro’s failure to establish a new high could have pushed traders to sell.
Read EUR/USD Fundamental and Technical Analysis
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