EUR/USD Holds In Lower Range Feb. 24, 2015
Euro Slides Back Into Range, Greece Debacle Not Over Yet
While the main stream media will tell us that all the worries over Greece are finished, most of us in the financial arena should know that its most likely just getting started. Yes the new Greek government did fold surprising me but they still have hoops to jump through when it comes to actually securing the funds along with hurdles to cross over regarding coming home to face their people. Some are already expecting Germany to reject the reform proposals, of which is almost a guarantee if they dont mirror the previous promises made to the Troika. When that does happen the game of chess will begin again and yes I will say it again, referendum. Considering what I have seen so far tha seems to be the last resort since one of the main promises of the Syriza party to win the vote of the people. However as many have said, and I have agreed since the Greek troubles started years ago. Greece needs to jump ship, default on the debt and get out of the Euro to have any chance of recovering from the mess their oligarchs got them into. On top of that setting an example and throwing those guys in jail would also be a good start.
Just to make things more interesting I heard through the grape vine that Spain has thrown in their two cents on any potential of the Germans taking it any easier on the Greeks. In short they said they will lose their rag and demand the same treatment. I have to say I dont envy either side of the table when it comes to the Troika or Greece. Both are in between a rock and, well, another rock. The hard place just isnt available now.
EUR/USD Tests Friday “Deal Done”Lows
The realization that the “Greek Deal Done”, all good for the Euro, was slapped in the face yesterday as reality sets in that this is far from over for all parties involved. Being stuck still inside the range still keeps me from having a bias but seeing them hold in the lower end does raise the probability of a break lower rather than breaking the highs and it seems the Asian boys dont want to be sticking their neck out this morning. Considering they couldn’t push high enough the hit the 1.1396 level before the move down yesterday the best short will be from 1.1356 but still more risky than yesterdays highs. Otherwise the level for the potential long hasnt really changed with yesterdays lows being just above it.
GBP/USD Tests Recent Highs
The GBP/USD made another attempt at the recent highs in what looks like an attempt to reach for the 1.5500 level but was stopped short again. If it didnt blow out the ADR heavy I would be happier but it does show a clear push. I will be bias for the long on this pair today looking first at 1.5432 but if they dont hold it there a test lower to 1.5404 will be the next level I look for the long. I will be open for the short from yesterdays highs and while the 1.5462 is valid, being within 10 pips of yesterdays highs makes it more risky if they want to run stops.
EUR/JPY Still Running Tight With The EU
Although the move down on the EUR/JPY yesterday wasn’t as drastic as the one on EU they are still correlated pretty tight. It seems some risk aversion came in as they pushed the USD/JPY lower at the end of the day. Again there is no reason to have a bias on this pair but if they run the EU lower it is likely to follow. The same holds true that the best shorting level is up at 135.70 but a turn at 135.23 or 135.00 wouldn’t surprise me. However if there is any EU strength I will ignore the lower levels to short from. The only place to look for the long is 134.55 but would rather be short either taking profits or waiting for a break.
Forex News Today
The calendar is a little busier today starting early with German GDP. Expected to be a flat .7% the chance for a disappointment is better than a pop up in my view. Otherwise it will likely be close and will need a drop below zero showing recession in order to create a sustained move. There is also Euro Zone CPI data later expected to remain below zero. If there is any further drop it should be bad for the Euro since the ECB is already going full retard next month.
During the US session Super Mario speaks along with the Janet Yellen testimony to congress starting. Both of these have high potential to push the markets on their comments. I expect Draghi to pump the European Economy to some extent but the fact he is going full print mode tells a different story. Im sure Yellen will dodge what she can but the Q&A will be interesting to say the least.
Asian session traders have Chinese HSBC Manufacturing PMI expected to drop a bit lower tomorrow, having potential to weaken the AUD.
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