The euro is finding a toe hole on speculation that the new Greece government may soften its stance and work with international creditors.

Image courtesy Tom DelmeGreece is attempting to renegotiate terms of its bailout, at the start of the new government it took a hardline approach running into a brick wall. However, in its most recent outline the government is showing willingness to negotiate helping to send the euro modestly higher against the U.S. dollar (FXE, quote).

The move to renegotiate rather than to demand a write down has eased the tensions of Greece leaving the euro zone. If this were to happen to it be the first country to do so and besides sending shockwaves through the euro zone it would lead to speculation and uncertainty to which country would be next.

The current downward Fibonacci wave has price turn just shy of its target of 1.10316. Since the pair rain fast and hard toward the target we didn’t get a “C” retracement and very well can be in process of retracing to the .618, .50 or .382. The .382 puts price at 1.2184 while the .50 brings a retracement to 1.2318.

This far into the wave I personally would wait until we retrace back and put in a “C” around the 1.2200 level. Look for a bearish candlestick pattern for indications of a return to the target.

On other currency events the Reserve Bank of Australia (FXA, quote) cut interest rates overnight to a new record low of 2.25%, RBA cited slowing growth. Australia is highly dependent on commodity prices and with such a strong U.S. dollar (UUP, quote) pressuring commodity prices making the move not all that surprising.

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