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FX Market Readies for Weekend Summit for Greece Deal

FX Market Readies for Weekend Summit for Greece Deal

Christopher Vecchio, CFA,

Talking Points:

- European FX pairs quiet as market awaits summit on Saturday.

- May be deemed best risk management to lower leverage today.

- See the June forex seasonality report.

If you've been away from the market for the past 24-hours, depending upon where you look, it might not seem like you've missed anything at all. The European FX pairs in particular are a bit quieter this Friday, as traders slow their pace with the Eurogroup summit having been pushed back from Thursday to Saturday. With German Chancellor Merkel reportedly saying that she 'wants a deal done before markets open on Monday,' it seems all but certain this weekend will produce a bevy of headlines that could very well lead to wide disparities in price at the open - gaps from the Friday close.

As such, it may be deemed best risk management practice for traders to reduce position size and leverage ahead of the close of markets later today. While the potential outcome for Greece is unknown - the absolute magnitude of the fallout around a positive or negative outcome will be enough to have a significant impact on prices over the weekend.

While there are several interesting setups in the USD-pairs in play or currently developing right now, the propensity for these pairs to have a varied open on Sunday from today's close almost makes today's charts - with two days of no trading ahead of us - less significant than Sunday's charts - with five days of trading ahead. Factoring in a less than exciting DailyFX economic calendar for Friday, June 26, and it may be best to hold off on the trigger until the market opens on Sunday.

One development we're keen on watching through the weekend will be the Greek negotiation's impact on the EUR-crosses, which have recently arrived at key technical junctures. Needless to say, a gap and hold through these levels of significance (covered yesterday, and still valid today) at the market open on Sunday could have material repercussions for price in the days ahead.

Going into next week, it's also important to be mindful of the holiday-shortened calendar, resulting in the most important economic data of the week - the June US Nonfarm Payrolls report - being released on Thursday as opposed to its usual 'first Friday of the month' routine. As such, in a compressed week bookended by major events - the Greek negotiations over the weekend and the US labor data on Thursday - volatility may be running a bit higher than it may otherwise would have at the turn of the year.

See the above video for technical considerations in EURUSD, GBPUSD, USDJPY, AUDUSD, and the USDOLLAR Index.

Read more: EUR-crosses Face Retest of Breakouts as Greece Faces Deadline

--- Written by Christopher Vecchio, Currency Strategist

To contact Christopher Vecchio, e-mail

Follow him on Twitter at @CVecchioFX

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.