Summary of last week:
The currency pair opened one of the largest gaps downward in recent years. This was the result of uncertainty related to Greece. Markets remained constantly on the alert which led to strong fluctuations and even incomprehensible movements. After opening the trend we saw the bottom of the 1.0954 level and then, without major problems has led to the demand side closing the gap and establish a high of 1.1279. At the end of the week the euro gained slightly against the dollar by 0.24%. It is worth noting, however, that despite the many negative reports that appeared last week we saw the strong depreciation of the EUR / USD, which may confirm that the market still believes in the positive outcome of the Greek case.
A few words about Greece:
In the last week of negotiations on the EU - Greece has been interrupted as a result of disagreement. The situation looks much complicated, because both sides do not want to give way. Greece has not repaid on June 30 creditors more than 1.6 billion euros. At the moment, we are waiting for the results of the referendum, which will indicate the Greek journey. If the Greeks will talk in a referendum in favor of continuing austerity, the European Union will help Greece and allocate billions more in aid to the country. If the Greeks say NO, in this case may lead to a crisis on the Brussels - Athens. It is difficult to predict what will be the consequence but one possibility is assumed to return to its own currency by Greece. Whatever they see the election results Greeks are in a very difficult position.
The latest survey results:
Poll GPO Mega TV - Yes: 44.1% vs. NO: 43.7%
Bloomberg / University of Macedonia - Yes: 43% vs. NO: 42.5%
Ethnos / ALCO - Yes: 44.8% vs. NO: 43.4%
As you can see, each survey is close to the margin of error.
Economic calendar next week.
The coming week is full of many important events, but they may remain in the shadows of the situation in Greece.
Monday: The contract factories in Germany and the PMI and the ISM index in the US;
Tuesday: Industrial production in Germany and the US trade balance;
Wednesday: Minutes of FOMC meeting;
Thursday: German trade balance and declared to the ascendant unemployed in the US;
Friday: no important data
Forecast for Monday:
Because of the referendum in Greece, do not take into account a purely technical analysis. It is worthwhile to consider what the consequences might bring any results. The market assumes positive outcome of the referendum, which will start next tranche of aid to Greece. In this connection, it should gain the euro. Very likely it is that we see today at the opening of the next gap.
If the Greeks say yes in this case we can see the euphoria and gains in the EUR / USD pair. The objectives should be 1,1150-70 zone and 1.12 and 1.1240. It was quite possible that as a result of market euphoria will seek to recent highs at 1.1279 and in case of their breakthrough opens the way to levels around 1.1456.
If the Greeks say no, then we should see the euro Sale, as in this case, the Greek government will get strong support and emphatically reject any imposed reform. Such a situation will introduce nervousness in the markets and discussed the course of steam should act in the first place towards 1.0954 or 1.10 and lows from last week. One should expect a strong sell-off and a deterioration lows as well as the large gap downward.
At the moment it is hard to determine how the currency pair will behave tomorrow, and therefore I would suggest to stay out of the market until clarification of the situation.
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