- Published: 30 June 2015
- Written by Editor
After having hair cut in harder critical situation in 2012 amid the debt crisis increasing worries hitting the European economy, The economic situation now is easier.
The pressure on EU Fin Ministers is non pretty much lower with current imposed ECB's QE which provides the required help to Spain and Italy, after both of them refrained from asking for rescue plan halting the activation of OMT rules on them.
So, why is this consolidation between Greece and EU?!
It is seriously required now from the ECB to show that it can widen its QE to contain any sack of liquidity in EU. It can show also that its ELA can be to any country in EU to press down the cost of borrowing.
The ECB should restore confidence in EU Economy which can be now by higher cost than what can be submit to Greece to end this unwanted problem.
Cutting Greece off EU or directing it to do cannot cap the political changes which can be in Spain or Italy whereas the main source of worries.
The EU Economy which could hardly get rid of the deflation stance in April and May can be in need of showing that it has enough liquidity and credible situation to get through the crisis with no credit crunch can raise the single currency value to press the EU economy down again into deflation.
Greece has also achieved remarkable progress and it can return to full access to the bond markets and also adopt the ECB's QE by obeying to EU can press down its sovereign debt yield.
After Feb. 20 EU preliminary acceptance of offered Greek list of financial measurements Greek 10YR bond yield has fallen below 9% but it rose later to surpass 13%.
With this current consolidation, Greek 10YR bond yield can easily surpass 15% and that yield rising is hard to be for the Greek bonds yields only but it can raise also the yield curve in all EU high-indebted countries and also it can raise the yields of other high debt ailing economies across the globe like Argentina.
This dovish market sentiment can push the credit rating agencies to change their evaluations of many countries. UK's credit rating has been actually downgraded from stable to negative by S&P.
In the same time, there can be increasing demand for bonds of funding countries having high stable financial in EU like Germany and also France as long as there is no signal from them of having difficulties because of the crisis which is expected to cause relatively high volatility in the next days by God's will.
While the referendum is mostly expected to be by Tsipras's anti-austerity situation, as what had been seen before in 2011 when the Greek PM George Papandreou decided to call for referendum on austerities measurements before canceling that referendum on Nov. 3, 2011.
EURUSD could contain the opening gap of the week by rising above 1.1172 reaching 1.1278 after falling to 1.0954 in the beginning of the week on the capital control announcement in Greece.
EURUSD is now moving with itshourly 20-SMA aboveits hourly 50-SMA and itshourly 100-SMA but below its hourly 200-SMA.
Over the daily chart, the pair is now above its 50-SMA andits 100-SMA below its 20-SMA and also is below its 200-SMA which is moving now below the extended trendline resistance from 1.3993 to 1.37.
The pairdaily Parabolic SAR (step 0.02, maximum 0.2) is reading today 1.1380 in its sixth day of continued existence above the trading rate reflecting the pressure which has been put over the pair recently, after easing of the upside momentum by forming second high at 1.1437 below 1.1466 high of last May. 15
The pair daily RSI-14 is nearly in the neutral territory reading now 49.076 and also its daily Stochastic Oscillator (5, 3, 3) which is more sensitive to the volatility is having its main line now in the neutral region reading 56.168 and also signal line is in the neutral region reading 39.480, after holding above the oversold area below 20 by rebounding from 1.0954.
God willing, EURUSD can meet in the case of rising above 1.1278 which stopped it yesterday, before meeting another resistance at 1.1437 below 1.1466 which could stop the pair rising on last May. 15 and it can be followed by facing 1.15 psychological level which can fall to pave the way for testing higher resistance by 1.1533 which can be followed by Pre-QE rates above 1.16, beforemeeting another resistance at 1.1679, which can be followed by 1.1870, before 1.1975 which can fall to open the way to psychological resistance at 1.20.
While the falling from here can be met by facing 1.10 psychological level which can be followed by 1.0954, before 1.0818 which could stave off the pair falling on last May. 27. The falling below it can be faced by supporting level at 1.0658 before 1.0520 which could prop the pair up on last Apr. 13 to form higher low above 1.0462 which capped the pair falling on last Mar. 13.
Have a good day
Kind Regards
FX Market Strategist
Walid Salah El Din
Mob: +20 12 2465 9143
E-Mail: This email address is being protected from spambots. You need JavaScript enabled to view it.
