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IronFX Essential Intraday Comment | 22/06/2015

• The dollar traded higher against almost all of its major peers during the European morning Monday, in the absence of any major market moving events and ahead of the EU leaders’ summit on Greece later in the day. The greenback was virtually unchanged against AUD and CAD.

• European stock markets and peripheral Eurozone bonds all rose, supported by increased optimism this morning that Greece and its creditors may reach a last-minute agreement. The optimism stems from new proposals presented from Athens that could have some face-saving concessions and avert a default. Note however that the summit is not the place for detailed negotiations and Greece will have to meet with the three institutions (ECB, IMF and European Commission) to reach a final agreement. On top of that, in case of no concessions for Greece from its lenders today, the talks could resume at the scheduled EU leaders meeting on Thursday. That would probably be too late for Greece to receive the money it needs to make a payment to the IMF on 30 June.

• EUR/GBP hit resistance at 0.7170 (R1) and traded somewhat lower during the European morning Monday. On the 12th of the month, the pair fell below the support (turned into resistance) barrier of 0.7265 (R3) and completed a double top formation on the 4-hour chart. Since then, the price structure has been lower peaks and lower troughs and therefore I believe that the short-term path remains to the downside. However, taking a look at our short-term momentum studies, I see signs that an upside corrective move could be in the works before the bears pull the trigger again. The RSI edged higher after hitting support near its 30 line, while the MACD has bottomed and crossed above its trigger line. There is also positive divergence between both these indicators and the price action. A move above the 0.7170 (R1) line is likely to confirm the corrective move and perhaps open the way for another test at the 0.7200 (R2) key hurdle. On the daily chart, the pair has been trading in a non-trending mode since mid-March. Therefore, I would consider the overall outlook to be neutral.

• Support: 0.7125 (S1), 0.7060 (S2), 0.7000 (S3)

•Resistance: 0.7170 (R1) 0.7200 (R2), 0.7265 (R3)

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