Forex Flash: EUR/USD continues rally in spite of Greek deadlock – UBS

FXstreet.com (Barcelona) - Moving towards equities, the decreased uncertainty over financial markets was cited as a driver behind the improvement in the leading indicator. The EU was also supported by a Bloomberg report, which cited two senior German lawmakers, Meister and Barthle, as noting that Germany is open to the idea of providing funding to Spain via the ESM's precautionary credit line.

"The precautionary credit line allows member states to continue to access financial markets while tapping the ESM's credit line as and when required - it carries lesser hurdles and can be implemented faster than a full adjustment program." writes Chris Walker, a Research Analyst at UBS.

On the record, German Finance Minister Schaeuble opposed this idea earlier. Furthermore, the lawmakers later clarified their comments saying that they were over interpreted. This comes a day after Spanish yields fell marginally on Tuesday, though the EURUSD was undeterred by headlines from Greece that the government's negotiations with the Troika hit a deadlock on Tuesday over labor market reforms.