Euro still hanging onto Greece

While Greece looks like it is headed for a positive outcome, price action in EUR/USD has been fairly muted and this is perhaps a result of traders waiting for the list of reforms from Greece. 

Greece
Source: Bloomberg

Given Greek leaders have fought so hard to prevent deep austerity measures, it’ll be interesting to see what compromises it can come up with. EUR/USD has been range-bound for a while and stuck in a consolidation zone. Greece will continue to present headline risk and I feel depending on how the list of reforms is construed by the market, then we are likely to then see a move in the euro.

ECB President Mario Draghi also speaks this week and needless to say he’s one of the key central bankers to watch this year. On the USD side of the equation, traders will be eyeing Janet Yellen’s testimony very closely; while she is more likely to mirror the minutes from last week, I feel she’ll deliver a mostly balanced testimony. Any mention of moving towards policy normalisation is likely to be construed as a hawkish sign.

While it is difficult to make a call on which way the pair will swing this week, a hawkish Janet Yellen and dovish Mario Draghi (along with Greece rhetoric), there is a good chance the pair could be facing some downside. 

EUR USD chart

EUR USD chart
Source: IG charts

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