Euro Heading Higher, Even with Greece on the Brink of Collapse

The Greek government is on the edge of complete collapse. A bailout payment from the EU and the IMF ($8 billion euro due this month) has yet to be made, since there is uncertainty about whether or not Greece will meet the terms of the help. On top of that, Greek leaders are contemplating withdrawal from the eurozone.

Rather than sinking the euro, though, this development is allowing the euro to strengthen a little bit. While the initial insistence from Angela Merkel and Nicolas Sarkozy that Greece, in effect, “make up its mind” sent the euro lower, Forex traders are nervously supporting the 17-nation currency — for now.

There is confusion over whether or not there will be a referendum on eurozone involvement, as well as the possibility that Greek Prime Minister George Papandreou could face a no-confidence vote. The future of Greece is up in the air, as is its involvement in the eurozone. Other eurozone leaders have begun publicly talking about was has only been whispered the last few months. With public acknowledgement that Greece may have to leave the eurozone, it appears that EU leaders are preparing the markets for a very real possibility.

At 12:42 GMT, EUR/USD is higher at 1.3800, up from the open at 1.3747. Additionally, EUR/GBP is very slightly lower at 0.8617, down from the open at 0.8619. EUR/JPY is up to 107.60 from the open at 107.34.

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