Investing.com -- EUR/USD inched higher on Wednesday halting a four-day slump, as market players kept a close eye on major developments in the Greek debt negotiations.
In Brussels, Greek prime minister Alexis Tsipras said his nation is close to reaching an agreement with its troika of creditors deemed necessary to unlock critical aid that could allow it to stave off bankruptcy. The two sides have begun the process of drafting a technical level agreement on a comprehensive bailout package, according to Athens officials.
"We have made many steps. We are on the final stretch towards a positive deal," Tsipras told reporters."
EUR/USD gained 0.0031 or 0.29% to 1.0905 placing the brakes on an extended skid over the last 10 sessions. Previously, the euro had fallen sharply from a three-month high of 1.1467 on May 15, as the possibility of a 2015 interest rate hike from the Federal Reserve coincided with heightened concern of a Greek departure from the European Union.
A deal in the four-month stalemate could free up the remaining €7.2 billion of a 240 billion bailout euro zone creditors have provided to the cash-strapped Mediterranean nation. Greece is in desperate need of the stimulus package as it reportedly grows closer to running out of cash by the day. Before the deadline to reach an agreement expires at the end of June, Greece owes approximately €1.6 billion to the International Monetary Fund over several payments due next month.
Greek officials believe a deal can be reached without making concessions for pension and wage cuts, according to multiple reports. The austerity measures, however, were presumed to be a prerequisite for reaching any accord. Officials from the European Commission, meanwhile, painted a different picture on the developments of negotiations.
“We are working very intensively to ensure a staff-level agreement," European Commission vice president Valdis Dombrovskis told reporters. "We're still not there yet."
On Wednesday afternoon, shares on the Greek Stock Market soared at the prospects of a deal.
EUR/USD likely gained support at 1.0862, the low from May 26 and was met with resistance at 1.1181, the high from May 21.
Yields on Greek 10-Year bonds plunged 86 basis to 10.58% amid the developments in the talks. On a year-over-year basis, the yields are still up 485 basis points, illustrating the diminishing value in Greek sovereign debt.
Yields on German 10-Year bunds inched up a basis point to 0.55%, while yields on U.S. 10-Year Treasuries fell a basis point to 2.13%. The spread between U.S. and Germany 10-year bonds rose to 157 basis points.
USD/CAD remained steady around six-week highs of 1.2454 after the Bank of Canada decided to keep its benchmark interest rate constant at 0.75%.