EUR/USD Returns to 1.14 on Greece Hope

The euro rose against the dollar on Monday on a glimmer of hope that Greece may avert a debt default after Athens offered new proposals to foreign creditors ahead of the emergency euro zone summit later in the day.  The common currency EUR= ticked up 0.3 percent to $1.1383, inching closer to a one-month high of $1.1440 hit on Thursday.

But many investors remained cautious because it was not immediately clear how far the new proposals yielded to creditors’ demands for additional spending cuts and tax hikes, nor whether creditors can stomach the offer.  “The euro is surprisingly solid. It’s either that markets are still betting that some sort of fix can be found for Greece’s funding woes or speculators are closing their short positions,” said Daisuke Karakama, chief market economist at Mizuho Bank.

“Many players are sitting on the sidelines and nervously waiting for news headlines from Europe. It’s all about the euro today.”  After four months of wrangling and with anxious depositors pulling billions of euros out of Greek banks, Prime Minister Alexis Tsipras’ leftist government showed a new willingness at the weekend to make an offer which they hope will unlock frozen aid and avert default.