Last Friday (July 7th), EUR/USD has surged the most since the beginning of the month. The pair closed at $1.1559, up 1.1% compared with the opening price $ 1.10346. After many without-end negotiations, the market expects a breakthrough in the summit between the leaders of the Euro zone and Greece on Sunday (July 12th). Fed Chairman Janet Yellen have stressed that the Fed will raise interest rates this year, prompting the pair under downward pressure in the US session.
After the weekend with no agreement, the finance ministers meeting in Brussels insist that Greece implement economic reform before beginning talks in detail about the bailout worth at least 74 billion euros ($ 83 billion). EUR/USD opened with a down gap at $1.10871, and then went up.
While the market is judging whether Greece has to seriously implement the reform measures in exchange for bailout or not, Greek debt deal suddenly reachs a consensus. Immediately, the euro appreciates against other currencies, the EUR/USD rose 0.4%, but then plunged down again, from the daily high of $1.11958 to $1.10529.
Currently the pair is trading at $1.10731, down 0.1% compared with the opening price ($1.10871) and tend to continue falling.
Unanimous decision on Greece’s debt agreements cannot satisfied the market yet. Whether the bailout is released or not entirely depends Greek commitments and actions on reform program. The future of Greece is not really guaranteed but the possibility of Grexit is reduced temporarily.
Greece is seeking for 22 billion euros by the end of August to cover immediate needs and a total of all 86 billion euros, Financial Minister Edward Scicluna Maltese said in an interview. This country owes about 3.5 billion euros from ECB maturing onJuly 20th. So to have the money to pay the debt, Greece is slowly give in to the request of the creditor. Doubtful atmosphere is still hanging over the market.
Forecast: EUR/USD will remain under downward pressure until the creditors and Greece discuss a new bailout package. EUR/USD is predicted to continue declining towards around $1.10000.