Vang SJC

Yesterday, the EUR/USD rose 0.28% because of weaker than expected US non-farm payrolls.

Currently the pair is at 1.11092 at 5:15 GMT + 7.

It is more likely that the pair will fall, mainly due to the following reasons:

  • Investors continue to be cautious with the euro, awaits Greek vote results. However, whichever the answer is, it will not benefit the euro. If Greeks vote “yes”, other party other than leftist government will take over, and it will remain a poor country in the Euro zone. If they vote “no,” the country can not receive aid and may rely on China or Russia. However, if they do not implement any reforms to improve the situation, it will continue to fall into the debt crisis again and leave Euro zone sooner or later.
  • Polls show that the number of people voting “Yes” and “No” are balanced, 41.5% said they would accept the proposal of the creditors, 40.2% refused, while others do not know how to decide. There is idea saying that the sooner Greece leaves, the better. Greeks’ wanting to stay is not a good sign.

However, the Euro also rose due to the following reasons:

  • People of Greece want to stay in the Euro zone could make Euro rise, but only in the short term.
  • US non-farm payrolls are not as strong as expected, the US economy’s showing signs of slowdown, reducing the possibility of Fed raising interest rates, making the dollar depreciate against the Euro.
  • Retail sales in the euro zone rose 0.2%, better than expected (0.1%). Improved consumer spending may support inflation outlook in the region.

Forecast: EUR/USD may to  drop to 1.10700 or rise 1.11300 then retreat. Today there will much volatility because of U.S. Independence Day holiday. Moreover, the market is looking forward to the referendum next Sunday.

There may be gap on Monday due to Greece’s bailout vote. It is likely that the people will say “Yes”, which may help euro to rise in short term.

Hanh Nguyen