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$1.2450 could hinder EUR/USD progress
Even though the equity and bond markets are pricing in the political uncertainty in Greece, we have yet to see the same reaction in the EUR/USD. The pullback in the US dollar, since the exceptionally high jobs report last week, has been the major story in the currency markets over the past few days. The recent decline in the US dollar is unlikely to be prolonged, and traders will be keeping an eye on developments in Athens.
Antonis Samaras is taking a big gamble by bringing forward the Greek presidential election, and he hopes to shore up political support for his pro-austerity party. If Mr Samaras’ plan is unsuccessful he runs the risk of leaving the door open to the left wing Syriza party. The anti-austerity party is performing well in the polls and it has pledged to do undo the government cutbacks if voted into power. Any additional political uncertainty in Greece could trigger a round of selling of EUR/USD.
Tomorrow the European Central Bank will announce the targeted long-term refinancing operation (TLTRO), and one survey is expecting a take up of €130 billion. A lower-than-expected uptake could prompt fresh speculation that the ECB will begin QE in early 2015.
Resistance is likely to be encountered in the $1.2450 region, and the bears will be looking to $1.23.