Yesterday (07th July), the pair EUR/USD had a volatility. Ending the session, the price closed at $1.10090, down 0.6% compared to the opening price ($1.10542). The price fell yesterday due to the emergency Greek meeting.
Yesterday, European officials and Greece held the meeting to discuss the Greek debt situation. Greek Prime Minister Alexis Tsipras was expected to submit a new proposal to the creditors. The plan was said to include a 30% haircut requires to creditors after Greek people voted against the request “austerity” of creditors last Sunday. But the meeting ended without achieving any results, the European leaders extended the deadline for Greece untill last Sunday (12th July) to decide whether accepting the conditions of the relief or not.
Next Sunday could be the climax of the war lasting for five years on the issue of Greek debt, also marks the possibility of the currency coalition seemed never to be broken. Chairman of the European Commission (EC), Jean-Claude Juncker said: “We have prepared detailed scenario for Grexit”.
The market is focusing on the Greek situation because Grexit will affect the financial system in the Euro zone. The Euro is under downward pressure, coupled with a stronger Dollar, that dragged the pair EUR/USD fell sharply.
At 1:00 am tomorrow the meeting minute of FOMC will be published. Investors is watching closely to look for clues to determine when the Fed raised interest rates.
While many analysts believe that Fed will likely normalize its interest rates in September, the International Monetary Fund (IMF) warned the risk if Fed moves too soon. IThe IMF sides with the doves on the U.S. central bank who want to wait to move. According to the IMF, core inflation is likely to remain flat in coming months and start to rise only toward year-end, the IMF said. There is unlikely to be any spike up in inflation, given the strong dollar DXY, lack of wage dynamism and the scope for firms to absorb cost increases into their profit margins.
At its meeting last month, Fed said to be no hurry to raise interest rates, combined with lowering the global economic outlook for this year and next year, the pair EUR/USD fell sharply. In the minutes released today, the Fed will likely reinforce the view “in no hurry to raise interest rates” and moving based on the economic data. This could make the Dollar drop and the pair EUR/USD goes up. However, the increase may not be large because the Greek situation is still there and the market has little market expectations on the clues that Fed will provide.
Currently, at 3:45 GMT+7, the price is trading at $1.10374, up 0.25% compared to the opening price ($1.00098).
Forecast: The pair EUR/USD is likely to climb to $ 1.10650 and the prices goes down. It is more likely that the price will go back to the $1.09700 area and forward to $1.08200.