The EUR/USD saw good buying in early Asian trade, pushing to a session high of 1.4438.

Some traders accredited the move to an article in Greek publication Kathimerini titled ‘a new Greek deal with troika imminent’, which suggested the ECB, IMF and European commission (also known as troika) have made significant progress in ongoing talks and are expected to finalise the details of the Greek government’s fiscal plan by tonight or tomorrow. There are reports that the government has reached an agreement with the troika to lower the top rate of VAT to 20% from 23%, which is sure to upset a few European voters if proved correct. There is certainly some contention here, as the story was actually released sometime before the spike higher this morning. Overnight comments from EU official Mr Rehn seemed to back up what other officials have suggested (that Greek talks are set to end in the coming days), and threw his weight to the market consensus that there will be no restructuring anytime soon. We are hearing a lot of speculation at present about a fresh aid package (including the belief that Germany is set to soften its stance on restructuring Greek debt in exchange for a new aid package), and whilst this is likely to come to fruition, the way in which traders deal with the news is key.

We believe actual confirmation of an aid package will continue to see the EUR/USD supported, however does anyone genuinely believe the debt markets will allow Greece to fund itself longer term? Certainly most traders would answer ‘no’, but in the short term it buys them time and the market could revert back to focusing on inflation and yield differentials. The technicals suggest we could see a touch of weakness, although a move up to 1.4455 (the 50% retracement of the May sell-off) would probably be met with strong selling resistance.