The single European currency has lost around 40 points today as investors begin to fret that Germany is heading for a showdown with Greece.
The Greek government’s declared intention is to renegotiate the terms of its multifarious bailout agreements. The Germans meanwhile are determined to oppose any changes. This does not bode well for European harmony. Fears that a head-on clash is looming prompted investors to sell EUR/USD on a day with very little newsflow for the single currency. Greek PM Antonis Samaras thinks he can push through more austerity measures and then point to these as a sign of Greek progress and then get the terms loosened, but it does look as if patience with Athens is running out.
If the upcoming set of meetings between EU officials and Greek ministers runs into deadlock then we could see renewed selling of the euro versus the dollar. Only the hope of ECB action in September is likely to provide any succour for fans of the single currency.