Dollar remains directionless

The dollar is broadly unchanged as traders are indifferent to the possibility of a rate hike from the Federal Reserve this year.

Pound coins atop a dollar notes
Source: Bloomberg

Euro still waiting for Greece

EUR/USD is trading in the €1.12 region and the currency pair hasn’t moved much in the past two trading sessions. The Greek debt saga is still dragging on, and it looks like talks will take place over the weekend then spill into next week.

Even if all goes well it could be Tuesday before the Greek government will pass a deal, and that is assuming an agreement is struck over the weekend. The history of the eurozone debt crisis has taught us that a deal is reached at the last minute, and traders are quietly confident a compromise will be reached.

As I previously stated, dealers have been ignoring positive economic data from the US, and yesterday’s jump in consumer spending was the biggest in six years. However, it had little impact, and this confirms my suspicions that the dollar will continue to decline.

It is a small concern that during this month EUR/USD has failed to take out the May high, but the bias is still to the upside. EUR/USD has been moving higher since March with the resistance at $1.14 as the target, and a sell-off will find support at $1.10. 

Sterling trades sideways

The pound has been trading within a tight range for the past couple of days but, there hasn’t been much to go on in terms of economic announcements from the UK.

The University of Michigan consumer sentiment at 3pm will provide volatility, and the market is anticipating no change from the preliminary reading of 94.6. As stated above, yesterday’s strong US consumer spending data did little to attract dollar buyers, and should the report miss estimates GBP/USD will rally.

The pound has been moving higher since April, and the $1.57 region has been providing support. The area feels like a turning point where it could make an attempt on the monthly high of $1.5930 or fall back to the $1.5550 area. 

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