EUR/USD hits one-week low after Greece hints at default

EUR/USD hit a one-week low of 1.1127 in Asia after German newspaper Bild said the Greek government is preparing to possibly go without next bailout payment of EUR 7 billion if no debt relief is offered by the creditors.

Greece also warned it could be thrown deeper into recession if Brussels blocked a debt deal at the next meeting of Euro area finance ministers. The relatively stable Eurozone and the resulting inflow into the European equities could be reversed if the Greek situation worsens.

The common currency was already on the back foot, well before the Greek news hit the wires, courtesy of Draghi’s dovish comments while addressing European lawmakers in Brussels. The ECB President acknowledged all the positives, but stressed the underlying inflation was “subdued” and the need to stick with QE.

The European desks may offer EUR as well, especially if the Greek bond yields spike, forcing the investors to pour money into the safe haven German bunds.

EUR/USD Technical Levels

The spot was last seen trading around 1.1134 levels. A break above 1.1186 (4-hour 50-MA) would open up upside towards 1.1250 (May 25 high on 4-hour) and 1.1268 (May 23 high).

On the other hand, a breakdown of support at 1.11 (zero levels) could yield a sell-off to 1.1067 (4-hour 100-MA) and 1.1021 (May 7 high on 4-hour).

The 4-hour RSI continues to form lower highs and lower lows and hovers below 50.00 levels.