Greece gives in to reforms

The Greek government agreed to reforms late last night in order to secure financing and prevent bankruptcy.

David Madden

2015-03-20T08:54:27+0000

Source: Bloomberg

Euro helped by Greece

After putting up a good fight the left-wing Syriza party stated it will draft a list of reforms within a few days in the hope that it would improve relations with the rest of the eurozone, and more importantly see off bankruptcy. EUR/USD was given a slight lift on the back of this, but unfortunately for the bulls the rally will be short-lived as good news doesn’t resonate with the market as much as bad news does.

In the post-Federal Reserve statement session some of the wind was taken out of the sails of the dollar, which means EUR/USD will not be targeting parity in the near future; however, the US central bank is still tipped to raise rates this year so the downward trend remains in place.

The $1.07 level is acting as resistance, and if this mark is held it will bring the support at the 200-hour moving average of $1.0635 into play; a move through that metric will put $1.06 is sight. Major support has been found at $1.05, the medium-term target. A move above $1.07 will put $1.08 on the radar, and beyond that traders will look to $1.09.

Spot FX EUR/USD chart

Pound still suffering

GBP/USD has fallen back into its downward trend as the market remains fixated on yesterday’s dovish comments from Bank of England member Andy Haldane. Mr Haldane stated the BoE should cut interest rates to help spur economic activity in the short term.

As I previously stated, Mark Carney has left the door open to loosening monetary policy to tackle low inflation if he felt it was required, and this growing dovish sentiment will keep pressure on GBP/USD.

The pound was already undergoing a correction versus the dollar following the spike seen after the Fed announcement, and Mr Haldane’s comments are ensuring the downward trajectory of GBP/USD remains in place.

The first downside target is $1.47, and a move below that metric will bring the support at $1.4635 into play. A move higher for GBP/USD will encounter resistance at $1.48, and if that mark is cleared the 200-hour MA of $1.4870 will be the target.