EUR/USD: forecast for July 6-12
By Elizabeth Belugina
Greece remains in the limelight. The nation missed a 1.5 billion euro repayment to the IMF on June 30 and went into a technical default. Greek authorities surprised the market by announcing referendum on austerity measures on Sunday, July 5. In case of a “Yes” vote the current government of Alexis Tsipras might resign and the technocratic authorities will be appointed to secure a deal with creditors. If the Greeks say “No” as Tsipras is urging them to, Greece’s financial system will collapse and it will likely have to leave the euro area.
The results of the opinion polls change from day to day. On the one hand, the nation’s population is tired of spending cuts and other tough measures. On the other hand, people are afraid of the turmoil which will start if they reject bailout.
The biggest risk for Greece is the poor state of its banking system. Greek banks stayed shut during the past week and are to reopen on Tuesday, July 7. However, the lenders are running out of money. Greek companies have serious troubles with import.
All in all, the prospects of the euro look grim regardless of the outcome of the Greek vote. The “No” vote will make EUR/USD go down to 1.0800 and probably lower. The “Yes” vote may provoke a spike in the euro to 1.1350/1.1550. Here investors will once again start selling the euro, because political problems won’t end here. Don’t forget that Greece has to pay 3.5 billion euro to the ECB on July 20. This won’t let the relief last long.