As mentioned in my previous article, i expected the Euro to be able to recover losses against the Dollar after a horrendous start to trading and the EURUSD managed to jump by an incredible 300 pips to 1.1275 yesterday. While it might surprise many that the Euro was able to recover losses despite the Euro-Zone finding itself in such an unusual situation, it's important to point out the traders were likely encouraged to by an acknowledgement that Greece hasn't quite yet left the Euro-zone.
The probability of such a Grexit has certainly increased, however there is still time for a deal to be agreed and optimism remains that one will be reached. It is also possible that investors are interested in looking for sell-on rally opportunities in the EURUSD, which they have enjoyed entering over the previous month. If the EURUSD is unable to advance towards 1.13 by mid-european trading, we are likely to encounter another pull back towards 1.1150. One thing that is for sure is that Greece will not be meeting its IMF repayment, and once confirmation of this is announced i would expect the EURUSD to come under bearish pressure.
Despite the possibility of a Grexit increasing, Gold is still struggling to find additional buyers. While this could be seen as evidence that optimism remains that a deal between Greece and its creditors will be reached, i personally feel that it is because the Federal Reserve will be raising US interest rates in the next couple of months.
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