Euro eyes Greek talks

EUR/USD is higher despite the ongoing talks over Greek debt, and the US GDP report at lunchtime is putting pressure on the pound.

Source: Bloomberg

Euro edges higher as Greek deadline looms
The euro is trading higher this morning, even though no deal has been reached between Greece and its creditors. Christine Lagarde of the International Monetary Fund said it is ‘possible’ that Greece will leave the euro, and traders are unnerved by this. As possible as it is, the Greek population are still in favour of sticking with the single currency. Some traders would argue that if Greece were to leave the euro, it would give confidence to the currency, but the political ramifications could be catastrophic – other nations may also wish to leave.

Greece has endured many crisis talks over the years, and even though things are heating up, this round of talks will end with some sort of compromise being made by each side. That is why EUR/USD is pushing higher into the weekend. Looking further down the line, Greece will have to make other repayments over the summer and the medium-term view is that EUR/USD will remain in its downward trend.

Currently acting as resistance for now is $1.10, and a move through this level will mean the next big resistance will be $1.12. If $1.10 isn’t cleared the support at $1.09 will come into play, and then $1.0820 will be on the radar. 

Sterling sub $1.53
The pound is still trapped in the downward trend it has been for over two weeks now. Even though the economic data from the US yesterday was mixed, the greenback is leading the charge again. The latest jobless claims from the US ticked higher, but the pending home sales jumped to a seven-year high, and that is what swung it for the dollar.

The US preliminary GDP reading at 1.30pm (London time) will be the highlight of the session, and the market is expecting a reading of -0.9%. This compares with the previous reading of 0.2%, and a negative growth reading would push GBP/USD higher. The Federal Reserve is tipped to raise interest rates in September, but it would seem unlikely if US GDP contracted during the first-quarter.

Acting as resistance is $1.53 and if it isn’t breeched the support at $1.52 will be the initial downside target. Below that traders will look to $1.50. If $1.53 is retaken then next level of resistance will be $1.54.

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