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The Euro is braced for a big week ahead, with the market expectant of a positive outcome to the EU finance ministers meeting in Brussels on Monday. The Greek cabinet has met on Sunday, as have EU officials to discuss how to bring the Greek debt down from the current estimate of 129% of GDP to 120%.It is anticipated that the next tranche of the Eur 130 bio package will be approved, allowing Greece to avoid default. It seems like a big call to me, to make a judgement in the next 24 hours, having taken two years of wrangling to get this far.Even if/when a deal is passed, deep scepticism remains and this story does not appear as though it is going to go away any time soon. Already, the weekend UK press are printing some pessimistic articles about what may lie ahead, so it looks as though we are in for a busy few sessions, with a lot of data out, later in the week. We begin though with a long US weekend (Presidents Day), so liquidity will be thin late Monday/early Tuesday.
Technically the Euro continues to trade in choppy fashion and this looks as though it could persist as the 4 hour and daily oscillators point in opposite directions. The hourlies are pointing down, so the first move of the week, in Asia, may see some softness, but unlikely to go too far in either direction until we hear something from Brussels/Greece, possibly Tuesday, Asia time.
In the bigger picture, having tested and held the important 1.2970 level last week (50% of 1.2623/1.3320) the Euro is correcting nicely, having so far, reached 1.3195 before retreating a little, into the close on Friday. With the 4 hour oscillators pointing higher it looks to me as though there is a chance of 1.3200 eventually being taken out, with the potential for a move on to 1.3240 and then the 9 Feb high at 1.3320. If seen, beyond here expect to see acceleration to 1.3432 (50% of 1.4242/1.2623). Â Finally, above this is the top of the downchannel which currently lies at 1.3655 but there is too much wood to chop, to think about this yet.
In the event of a failure over the Greek deal, the downside could be pretty swift and may well see a quick return to last weekâ??s 1.2970 low and beyond here to the 29 Dec low at 1.2853. Below this, the 13 Jan low at 1.2623 would act as a target, but once again, worry about that if/when we get there. At this point, this looks the less likely direction, but events will show us as they unfold.
Aside the US holiday, we will get to see EU PMI, US existing Home Sales (Wed), German IFO, US Jobless Claims ( Thur), German GDP, US New Home Sales (Fri).
