EUR/USD: the risks remain
Those who trade EUR/USD should watch 10-year German bund yields: so far they had strong correlation with the euro. The yields have reached this week 8-month highs close to 1% on surprisingly strong euro zone inflation data. Moreover, the European Central Bank President Mario Draghi said that market volatility wouldn’t go away anytime soon. Then, however, German yields turned back down.
In addition, Greece delayed payment to the IMF. Next week the negotiations between the nation and its creditors will continue. Greece keeps doesn’t agree to cut pensions and on other conditions required by creditors. Although the market’s generally expecting a compromise this month, the uncertainty and the risk of default remain.
EUR/USD spiked to 1.1380 before sliding down. In the 1.1400 area there’s resistance of a trend line which is almost a year old. The focus has shifted to support of a 3-month uptrend channel in the 1.0900 area and further support at 1.0820 (May low).
European economic calendar for the next week is empty, so Greece will remain the main topic. Follow the news from G7 meeting on Monday. In addition, the speculation about the US rate hike will also influence the pair.