Greece Folds, Deal Done, Well Not Quite Feb 23, 2015
Greece Deal Done, Waiting On German Approval
Although Friday did see the Greeks fold and agree to an extension of the bailout terms with a few slight changes. We are still waiting for a German approval that some are saying wont be able to happen before the end of the month. I doubt they will reject it and the ECB will surely provide the Greek banks funding while waiting for the final approval. Having said that there is still plenty to be concerned about in coming weeks. Keep in mind that the Greek government still has its own people to deal with now and things are already starting to fall apart inside with one Syriza party member apologizing to the Greek people saying “Pity, and pity again… I apologize to the Greek people because I have contributed to this illusion… before it is too late, let us react!”
I have to admit I never expected new Greek finance minister Varoufakis to fold before at least playing the referendum card but I have to say the time left before Greece would effectively be cut off from the ECB and running out of money being only three days is likely to be the factor. They have bought four months to try and show their program changes have potential to work along with dealing with the backlash from the people they will surely be enduring. In short I am relatively sure that a referendum on Greece staying in the Euro is not far off. Its not over yet!
EUR/USD Bounces Off Lows On Greek Deal
After the EUR/USD breaking to the downside Friday as time was ticking away on the potential for a Greek deal, the news comes out just an hour before the New York open. They have a deal and Greece has capitulated, the Germans won this part of the battle. However with the new Greek government still having to go home with their tail between their legs I have my doubts that this will be the end by a long shot.
Price action wise not much has changed other than a daily rejection of lows around 1.1271 which is also this months lows. I will remain open on direction for this pair and be careful of taking entries due to the fact things could change quickly if the mention of a referendum come up. Otherwise this pair is more likely to hold this range while the potential for a break to the upside is there. The best level for the long is down around 1.1292 but if they are going to break it to the upside than the two daily levels above are where they will most likely turn it after a fake out. While the 1.1414 is valid for a short the 1.1439 is the safest entry level.
GBP/USD Shows Push Over Two Days
This push down on the GBP/USD is valid so I will have a small bias for the next push down today. However I am cautious of the bottoming formation that held the lows Friday. This doe suggest that they arent willing to push lower even if they did make the first push, it has potential of the fake out before a test higher. The best level to short is the daily 1.5404 level as long as they hold it lower during Asia while the best long potential I see is at 1.5357 or just above at the hourly 200.
EUR/JPY Move Mirrors EUR/USD
The push down and rejection Friday on the EUR/JPY shows that they are pushing along with the EUR/USD right now. As long as no big news comes from Greece then that correlation should be getting looser as they start to push on the Yen. I cant really call this any conviction for a push but if the correlation does hold for now this pair will continue to run with the EU. With the 13532 level holding early it will be a valid but higher risk long entry during London today. If they do show the conviction below then they will likely test lower around the 135.00 or lower but I will be cautious of the daily levels there. Those levels are also valid for the long so would be safer to wait for tests lower. Otherwise I will be open for the short around Fridays highs at 135.90
Forex News Today
The calendar only has German IFO Business Climate during the London session today. Expected to rise a full point leaves it open for a bigger move on a disappointment than if its better than expectations. With the only good thing coming from the Euro Zone being the Greek deal as of late my thoughts are it will be close or have a slight miss to the downside and wont cause a sustained move.
The US Has Existing Home sales expected to drop below 5M so it will most likely need a miss decently above that to gain much USD strength while a miss to the downside could get more USD weakness but I expect the flows in and out of USD to be related to risk more than US data for now.
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