Difficult to believe but it is just over a year ago that Greece received its initial bailout package which saw the EU and the IMF provide 110bn euros ($158bn) on the understanding that Greece would implement an austerity programme to reduce its deficit. Since then the Greek debt issue has seldom been off the front page and today is no exception as news that Germany may be softening its stance on a restructuring of Greek debt has been signaled and thereby paving the way for yet another resuce deal. This change of tone has helped to bolster the euro and should help to move the eurodollar initially back towards 1.45 region and could even lead to a possible retest of the May 3rd high at 1.49. This is perhaps a perfect example of how as forex traders we have to ignore the media hype which currently surrounds the euro, which is apparently submerged under a welter of bad news. Despite all this the euro continues to survive and prosper which many traders find hard to understand since by all “normal measures” the euro should have sunk to the bottom of the sea several months ago. Furthermore, even if Greece does have to restructure/reprofile (a euphemism for default or even exit the eur, the euro will survive not least because it is run and managed by a group of political “ego maniacs” – my sentiment but not my words!
This more positive sentiment towards the euro has also been reflected in the eur chf and eur jpy. The former has been marking all time lows as the Swiss Franc continues to attract safe haven inflows while the eur jpy has continued to track the mildly bullish sentiment of the S&P500. Eur chf is now tracking back towards 1.230 on the daily chart, while the eur jpy will be looking to rest 118.10.
Aside from Greece the main focus for the euro dollar this week is the nfp on Friday, preceded on Wednesday by the ADP figures. Neither is expected to come in above expectation – indeed it’s more a question of just how bad they are likely to be and whether they will be the trigger for an extension to the Fed’s QEase programme which is due to end in June.
In summary for euro traders just ignore the media and look to trade what the chart is telling you and not what you think should be happening. In other words have faith in your own analysis.