EUR/USD higher on muted Greek bailout bullishness

Investing.com - The euro traded higher against the U.S. dollar Tuesday, but the reaction to the Greek bailout package was muted as investors remain uncertain if it will be sufficient to avoid default.

EUR/USD traded at 1.3258 during mid session U.S. trade after hitting a high of 1.3293 and a low of 1.3187.

The pair was likely to find support at 1.3114, last Friday’s low and technical resistance exists at 1.3293, the session high.

The single currency struck the high against the greenback earlier after euro zone finance ministers settled on the details of a new financial package for Greece, which aims to lower the country’s debt to 120.5% of gross domestic product by 2020.

Private-sector creditors also agreed to take a write-down on their bonds of more than 53%, which is expected to cut Greece's debt by EUR107 billion.

However, fears that the bailout package is not enough were sparked by an International Monetary Fund report forecasting Greek debt ballooning to 160% of gross domestic product by 2020.

In addition, unless 90% of investors agree to the bond swap, Greece may need to use force to obtain debt relief, causing legal issues.

Further worries of the incoming Athens government not enforcing the agreed upon austerity measures kept the single currency rally in check.

Meanwhile, the Troika, composed of the European Union, European Central Bank and the International Monetary Fund, said in its latest report on Greece's debt sustainability that "additional debt relief" will be required in the future.

Elsewhere, Spain saw short-term borrowing costs fall to the lowest level in two-years following an auction of government debt that met with solid investor demand.

The euro was higher against the pound and against the yen, with EUR/GBP adding 0.41% to hit 0.8388 and EUR/JPY climbing 0.19% to hit 105.65.

In other Greek news, Germany’s Finance Minister Wolfgang Schaeuble stated that the IMF could contribute as much as EUR23 billion to the Greek rescue package, but added that a final decision would be made at a meeting next week.