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The situation with Greece shows no signs of quick resolution and the situation on the ground is becoming increasingly tense.With payments systems essentially frozen the Greek economy could be facing food and medical shortages within a week which would turn this political stalemate into a humanitarian crisis.
Although the economic risks are evident, it is unclear if there is a political will in Europe to come to a rapid albeit temporary solution on the issue. At the very least the ECB must resume its ELA liquidity to the Greek banking system in order to unfreeze the payment mechanisms for the basic day to day transactions. That’s why the central bank remains the key player in this drama, but for now it has clearly decided to align itself with the Eurogroup and is acting as the biggest pressure point on the Greeks.
If there is no progress by tomorrow the capital markets are sure to react with more downside pressure and EUR/JPY could break the key support at 133.00 and tumble further possibly targeting the big figure at 130.00