We welcome you to a new trading week which promises to be a week of fireworks. After the breakdown of Greek aid talks, markets will now have to deal with the possible effects for the eurozone. Currently it seems as if the optimists on a Greek debt deal were wrong after the weekend developments marked an abrupt turn from last week’s hopes. Greek Prime Minister Alexis Tsipras shocked his counterparts with his call for a July 5 referendum on the austerity demanded by creditors, just a few days before the current bailout expires on Tuesday.
Greece declared a bank holiday until at least the national referendum and imposed capital controls to avert a financial collapse. Dark clouds may be looming on the financial sky, so traders should be prepared for strong market fluctuations this week.
The market will first focus on Greece and its IMF payment which is due on Tuesday. The rest of the week will focus on economic data, such as Eurozone Consumer Prices (Tuesday), ISM Manufacturing (Wednesday) and U.S. Non-Farm Payrolls due for release on Thursday. U.S. markets will remain closed on Friday for the Independence Day holiday.
Based on the recent upward channel, the euro has still failed to break significantly to the downside. As long as the currency pair trades comfortable above 1.09, we do not see a technical stimuli for an aggressive sell-off. Once it breaks significantly below 1.09 we see greater chances for a drop towards 1.0810 and further 1.0720. A next key support zone could be at 1.0720-1.0660. However, if the support line proved able to withstand the pressure we see a current resistance area at around 1.1050. Above 1.1080 our focus will shift to the 1.12-level.
Important economic data for today:
8:30 UK Net Consumer Credit & Mortgage Approvals
9:00 EUR Economic Confidence
12:00 EUR German Consumer Price Index
14:00 USA Pending Home Sales
We wish you many good trades and a profitable week.
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