Opportunities Abound in EUR- and USD-pairs after Greek Referendum
- EURUSD attempts to cover opening gap, fails at former TL support.
- USDCAD may be consolidating in ST triangle before moving higher.
For the second week in a row, the Euro gapped lower to start the week only to see the schism close, as market participants digested the results of Greece's referendum on Sunday. The vote, which saw some 60%+ check 'OXI' against the Eurogroup's recent aid proposal, saw EURUSD back under $1.1000 in the premarket, with prices buoyed in recent hours after hope emerged for a deal when Greece's unpopular finance minister abruptly resigned.
While the next few days and weeks will be tense leading up to (what should be) a true 'line in the sand' for Greece on July 20, when Greece needs to repay the ECB €3.5 billion. For other debt servicing deadlines, when under the auspice of a bailout, Greece has in instance been able to tap the ECB's profits from capital appreciation of Greek debt under the SMP program. However, in this case, creditors are withholding the profits to pass on; and the ECB certainly is not going to disperse funds to Greece only to see them returned - the market will clearly see this as monetary financing.
Even without clarity over Greece (the 'yes' or 'NOI' vote would have presented an easier path forward for markets), the referendum has had a meaningful impact on prices, and thus charts, in various EUR-crosses and USD-pairs at the start of the week. In some cases (AUDUSD and USDCAD), there may be opportunities to buy in to the emerging US Dollar rally. In other cases (EURGBP, EURJPY, and EURUSD), there may be opportunities to sell Euro strength as the opening gaps close.
See the above video for technical considerations in EURUSD, AUDUSD, USDCAD, EURJPY, EURGBP, and the USDOLLAR Index.
--- Written by Christopher Vecchio, Currency Strategist
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