Euro, US Dollar Ebb as Traders Await Greek News, FOMC Meeting
- EURUSD pinned just above $1.1200 to start the week.
- USDJPY yet to clear key ¥123.90 hurdle.
- See the June forex seasonality report.
Markets have opened quiet as the calendar turns into the second half of June, with traders eagerly awaiting concrete developments in the Greek debt negotiations (which really could occur at any time, but probably closer to June 18 and 19 when supranational Euro-Zone groups will meet) and the Federal Reserve's June policy meeting (on Wednesday). As we've already seen today, interim quibbling between Greece and her creditors has little impact on price; it is possible that headlines are dismissed until some semblance of finality is achieved - good or bad.
In a sense, while it's important to pay attention to headlines regarding Greece the next few days, it's equally important to not read too deep into them.
The theme with the clearer time horizon - the June FOMC meeting in two days - is a veritable powder keg sitting in the middle of the week. The recent stretch of US economic data has lifted growth momentum indicators to their best levels in four-months (namely the Citi Economic Surprise Index), and the market has started to price in the possibility of an October 2015 rate hike.
Traders should pay particular attention to the tone employed in the policy statement on Wednesday as it could reveal a rough outline of if and how many times the Fed will raise rates in the second half of the year. If policymakers find recent data sufficient to declare the Q1'15 slowdown temporary in nature, then markets may be too dovish on the Fed's rate hike prospects - something that could prove to be a boon for the greenback.
See the above video for technical considerations in EURUSD, USDJPY, and the USDOLLAR Index.
--- Written by Christopher Vecchio, Currency Strategist
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