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Finally the hope of the vast majority of the FX community materialized on Monday night, after the EcoFin meeting finally reached a deal regarding the ongoing debt crisis in Greece. According to the final announcement, the main issues comprised a cut of the interest rate applied to Greek loans, an extension to 30 years from the actual 15 years in the loans' maturity and a 10-year interest repayment deferral of EFSF loans. Also, the ECB will return its profits made on Greek bonds to the country's government. The precedent measures would aim to help the Hellenic Republic to hit a deficit of 124% of GDP by 2020, slightly above the initial IMF exigencies, at 120%. Therefore, Greece will now get the long awaited next tranche of financial aid - a combination of three tranches into one - worth €43.7 billion.

Buy the rumor…

Hence, a significant tail-risk has been removed from the euro entourage, although we should be able to see beyond the tree. Is this deal some sort of guarantee that Greece will now honor its commitments? What about the Greek debt sustainability? Does it look more solid now? In the opinion of Lee Hardman, Currency Analyst at BTMU, these measures would prove to be a short-term fix, undermining in the longer term the sustainability of Greece's debt. The always-effervescent political scenario in Greece would surely play its role in the upcoming weeks, with the potentiality of eclipsing the prior economic progresses, and of course adding extra pressure to the euro.

Of course, EUR/USD reacted accordingly, climbing to the area of 1.3010 soon after the announcement. Although, the ascent has proved to be very short lived, as the euro then depreciated below 1.2960 against the greenback. Uncertainty has now moved over the sustainability of 1.30 and these actual high levels, prompting investors whether the shared currency would overcome the associated vertigo, after last week's pronounced upside strictly 'on hopes' of a deal. Karen Jones, expert at Commerzbank, assesses

EUR/USD spent most of last week working higher and yesterday charted an inside day. The market has continued to climb during Asia and the correction looks set to extend to 1.3037, the 78.6% retracement. Ideally we would expect this together with 1.3075 (downtrend 2011-2012) to cap the advance.

… Fed's Beige Book the biggest event tomorrow

Light docket in the eurozone on Wednesday, as Retail Sales in Spain will inaugurate the session followed by inflation figures in Germany. Across the pond, U.S. New Home Sales will precede the Fed's Beige Book.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Source: Euro At 1.30: So Close, Yet So Far Away