Forex: Greece buys time; Will EUR/USD buy into Greece?
Forex pairs in this Article »
EUR/USD
FXstreet.com (Barcelona) - A new chapter in Greece's financial agony has come to an end after EU finance ministers finally reached a debt deal which will see the country, if the respective EU's national parliaments approve it, to be funded with an additional ¬44 bln through 3 different tranches, with each release subject to implementation of austerity programs.
The Euro reaction, however, was less than meet the eye, hardly achieving levels above 1.30 vs the US Dollar before a pause and consolidation around the 1.2880 area.
As hippocratic as this debt deal may sound to conceive that Greece can really be put back on a sustainable debt path, the truth is that markets will now have a big worry out of the way. As Westpac's FX strategist Sean Callow notes, "the deal should put Greece largely on the backburner for a couple of months before it starts missing its fiscal targets again."
Traders will now find themselves with a tricky decision to make, that is, doesthe EURUSD rally have really further legs to go? or is the short-covering about to face an uncommitted market, ready to repel targets past 1.3050/1.3100? Mr. Callow opts for the latter as the immediate scenario.
The context in which both Euros and US Dollars trade is still largely dominated by two major unresolved issues, which will arguably keep the EURUSD exchange rate trading erratically within familiar level into year end.
On one hand, the inactivated ECB Outright Monetary Transactions (OMT) program keeps the Euro limited to show major upward moves past the 1.3100/70, while the threat of it, ironically, also provides a major back stop to any EUR selling pressure.
On the other hand, the US fiscal cliff still shows little progress for now, an event associated with US Dollar weakness in the short-term, although it is logical to think an eventual deal will be struck, and US Dollar will enjoy some serious buying interest.
One Euro skeptic analyst is Mitul Kotecha, founder at econometer, noting that "the lacklustre reaction of the EUR following the Greek deal this morning highlights that much of the good news were already priced in..."
On the contrary, Marc Chandler, Head of FX at Brown Brothers Harriman notes that the pair show a constructive bullish outlook, and if the bulls manage to make a decisive break through the 1.3000-30 region, the next objective will be set around 1.31, potential downtrend drawn off the mid-September and mid-October high.
For the immediate future, and ahead of the London session, "as long as the 1.2950 holds, bulls will keep control of the pair, with a break above 1.3000, past Friday's high, pointing for an advance towards 1.3040" says in-house technical analyst Valeria Bednarik.
The Euro reaction, however, was less than meet the eye, hardly achieving levels above 1.30 vs the US Dollar before a pause and consolidation around the 1.2880 area.
As hippocratic as this debt deal may sound to conceive that Greece can really be put back on a sustainable debt path, the truth is that markets will now have a big worry out of the way. As Westpac's FX strategist Sean Callow notes, "the deal should put Greece largely on the backburner for a couple of months before it starts missing its fiscal targets again."
Traders will now find themselves with a tricky decision to make, that is, doesthe EURUSD rally have really further legs to go? or is the short-covering about to face an uncommitted market, ready to repel targets past 1.3050/1.3100? Mr. Callow opts for the latter as the immediate scenario.
The context in which both Euros and US Dollars trade is still largely dominated by two major unresolved issues, which will arguably keep the EURUSD exchange rate trading erratically within familiar level into year end.
On one hand, the inactivated ECB Outright Monetary Transactions (OMT) program keeps the Euro limited to show major upward moves past the 1.3100/70, while the threat of it, ironically, also provides a major back stop to any EUR selling pressure.
On the other hand, the US fiscal cliff still shows little progress for now, an event associated with US Dollar weakness in the short-term, although it is logical to think an eventual deal will be struck, and US Dollar will enjoy some serious buying interest.
One Euro skeptic analyst is Mitul Kotecha, founder at econometer, noting that "the lacklustre reaction of the EUR following the Greek deal this morning highlights that much of the good news were already priced in..."
On the contrary, Marc Chandler, Head of FX at Brown Brothers Harriman notes that the pair show a constructive bullish outlook, and if the bulls manage to make a decisive break through the 1.3000-30 region, the next objective will be set around 1.31, potential downtrend drawn off the mid-September and mid-October high.
For the immediate future, and ahead of the London session, "as long as the 1.2950 holds, bulls will keep control of the pair, with a break above 1.3000, past Friday's high, pointing for an advance towards 1.3040" says in-house technical analyst Valeria Bednarik.
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