Investing.com - The euro traded flat to slightly higher against the U.S. dollar during early U.S. trade Friday. European governments are considering slashing Greek interest rates and obtaining contributions from the European Central Bank to help Greece avoid a default.
EUR/USD traded at 1.3156 higher by 0.16% after hitting a low of 1.3115 and a high of 1.3170
The pair was likely to find support at 1.2930, the low of January 25 and resistance at 1.3170, the session high.
Euro zone finance ministers argued over how to best bail out Greece in last night’s conference call. Estimates that Greek debt would fall to 129% of gross domestic product by 2020, missing the 120% target casts fears over the viability of the proposed bail out.
Greek’s sovereign lenders are considering charging lower interest rates to help the island nation avoid default.
France suggested that central banks simply take the losses in Greek bonds, but this idea has not gained any support.
A two step decision appears possible where a bond exchange is approved at the meeting next week, then completing the EUR130 billion public aid program. However, this would result in high political risk as two votes are required in some national parliaments.
Risk sentiment was spurred as U.S. initial jobless claims unexpectedly fell to their lowest level since March 2008 last week, declining to 348,000, and positively surprising expectations for an increase to 364,000.
In another economically bullish report, the U.S. Census Bureau stated the number of building permits issued in January rose 0.7% to a seasonally adjusted 0.68 million, broadly in line with market expectations.
Adding to the confusion, a plan proposed by the European Central Bank to protect its bond holdings from a Greek default, has met with obvious resistance due to the ECB claiming unjust seniority over other debt holders.
Earlier, policy makers are studying the potential of granting a bridge loan to Athens, allowing the island nation to meet EUR14.4 billion in repayments which come due on March 20, avoiding a default.
The greenback was also supported after ratings agency Moody's warned that it may cut the credit ratings of 114 banks in 16 countries across Europe, citing banks' vulnerability to the sovereign debt crisis in the euro zone.
The euro traded slightly higher against the pound, with EUR/GBP adding 0.02% to hit 0.8312.
Investors are awaiting U.S. and Canadian consumer price inflation numbers as well as Bank of Japan’s policy meeting minutes on later in the trading session.