Greece misses another deadline

When you consider the sizeable hurdles that Greece will have to meet to keep its June debt repayments, EUR/USD has remained remarkably calm.

Euro and US dollar notes
Source: Bloomberg

Euro’s sideways trading likely to continue

Despite a plethora of institutional analysts predicting EUR/USD would reach parity either by the end of the year or the first half of 2016, we have seen remarkably little evidence that this will materialise any time soon.

The latest deadline over Syriza agreeing and implementing further cost-cutting austerity measures has now been passed, and the response from both Greece and its potential lifesavers has been to blame each other. This month will see another €1.5 billion required to be paid back to the International Monetary Fund and €5.2 billion in short-term debt.

Yesterday Christine Lagarde, Mario Draghi, Jean-Claude Junker and Angela Merkel were all reported to have met in order to thrash out an agreed stance around Greece. The fact that no-one from Greece was there is somewhat troubling.

With such a large question mark hanging over Greece it is difficult to see what progress EUR/USD can make, and as such a continuation of its lateral move looks likely.

Spot FX EUR/USD chart

Dollar recovers lost ground

GBP/USD has continued trending lower as the dollar has clawed back some lost ground. This week will see manufacturing, construction and services data out for the UK, giving the markets an opportunity to gauge exactly how strong the underlying economic picture really is. Both sides of this particular equation appear to have their problems, with the UK fearful of the mess that the eurozone appears to be getting themselves into. The US, on the other hand, look to have lost a lot of the resolve it initially had in going it alone as far as raising interest rates are concerned.

In the near term GBP/USD has a couple of important moving average levels to break through if it wants to continue falling, and the plethora of economic data will offer currency traders a number of opportunities to re-assess their perception of the UK’s economic strength. 

Spot FX GBP/USD chart

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