This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
There is clearly still a gulf between Greece and European leaders. Additionally, Germany is said to be preparing for Greece bankruptcy. Greek Prime Minister Alexis Tsipras is increasingly taking a hard line approach and refusing to take difficult measures. This week will be pivotal as we approach the June 19 deadline. On the US side, it’s all about the FOMC meeting this week where revised projections and Janet Yellen’s post meeting press conference will be key. Should the Fed sound a bit more upbeat - recent Q1 improvement in data certainly points in that direction - then we could see the greenback extend its gains. As a result, EUR/USD is the currency pair to watch this week as it continues to defy gravity and could face some real tests this week with Greece in play. EUR/USD is just holding on to 1.1200 and the risk off sentiment prevailing in Europe could see this level broken in the near term. Interestingly though, there is a dominant downtrend that has been in place since July last year and has been capping prices through June. There is also a minor uptrend from April lows and these two trendlines are combining to cause a compression triangle. As a result, the price action is likely to break higher or lower at some stage.