Mr. Papandreou Goes to Berlin

In Europe, all eyes are ears are on a visit from Greek Prime Minister George Papandreou to Berlin, where the lawmaker will seek the support of German Chancellor Angela Merkel.

Earlier this morning, in an interview with Frankfurter Allgemeine Zeitung, Papandreou said believes that if Berlin and the rest of the European Union agree to back Greece’s debt reduction program, it will help the nation raise the needed capital to finance its spending.

“We have not asked German taxpayers to pay for our pensions and holidays,” said the lawmaker. “That there is European support so that we can borrow money under better conditions. That is all we need."

Meanwhile Merkel is facing political pressure about backing Greece financially, a development which has put additional weight on the euro in recent days.

Elsewhere, the verbal support for Greece was strong with European Central Banker Mario Draghi telling reporters in Rome that the success of yesterday’s €5.0 billion bond auction demonstrates that Greece has convinced Europe of its sincerity to reduce its deficit, and in an interview with Deutschlandradio, Eurogroup President Jean-Claude Juncker said he doesn’t anticipate that Greece will require outside funding to correct its deficit, but that the nation has the full support of the European Union.

However the picture is not yet rosy. Greece’s €5.0 billion ten-year note auction may have been successful on Thursday, but an upcoming wave of debt sales from other euro zone nations may hinder the country’s ability to roll finance the rest of its deficit, according to an article in the Wall Street Journal on Friday.

Indeed, Greece’s ten-year note auction on Thursday was well bid, with the country raising €5.0 billion in the face of €14.5 billion in bids.

Nevertheless, the entire euro zone is looking to raise over €1.0 trillion in debt this year, paling in comparison to the €54 billion Greece needs to borrow to finance this year’s maturing debt and interest payments in Greece alone.

If demand for Greek debt appears to waver, expect another leg down in the euro as the fragile confidence from the last couple days gets shattered.

EUR/USD last traded flat at 1.3581 ahead of the nonfarm payrolls report in the U.S. So far today the pair has traded in a range of 1.3569 to 1.3607. Short term support lies at 1.3436 and 1.3424, with resistance at 1.3736 and then 1.3788.