Currency Analyst since 2010

EUR/USD: forecast for Jul 27 - Aug 2

By Elizaveta Belugina

Will Greece continue affecting EUR/USD or is the market already done with this topic?

In the past week Greek parliament has approved the second reform package demanded by the creditors in return for financial aid. This second set of measures was less austere than the previous one, so it was passed more easily. Next week the Greeks will be safe from tough decisions as further controversial discussions will take place only in August.

The market’s focus in the coming days will switch to the United States where the Federal Reserve will announce its monetary policy decision on Wednesday. There will be some rather important releases in the euro area like German Ifo business climate on Monday and the region’s inflation figures on Friday. However, these publications won’t have much of an influence on the current setup: the Fed is clearly moving closer to policy tightening, while the European Central Bank will continue quantitative easing (QE). In addition, investors will be aware of more uncertainty which will emerge from Greece next month: the negotiations on Greek debt relief won’t be easy, and political tensions in the nation itself will intensify.

Forecast: As a result, traders have little reason to buy the single currency. EUR/USD ran into resistance of the daily Ichimoku Cloud’s bottom and 100-day MA in the 1.10 area and will likely slide to 1.08 or even 1.07. Next resistance is at 1.1050, 1.1125 and 1.1215.   

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