EUR/USD is trading on lower ground, “hugging” the 1.0850 level, after it received a blow from the US side.
However, the push to the downside is also helped by no real breakthrough on the Greek talks. The crisis could certainly accelerate in the next two weeks.
USD
Dennis Lockhart, the President of the Atlanta Fed, said that he would need to see a “significant deterioration” in order for him not to support a rate hike in September. This means that if the NFP is OK on Friday and also in the first month of September, it is a smooth sailing towards the historic move.
While Lockhart is not exactly a dove, his comments add to ones heard by Bullard and to the general notion that the Fed is pleased by the recent improvement in the labor market and is ready to begin raising rates, even if this may be the only hike this year.
We will later get the ADP NFP and the ISM Non-Manufacturing PMI, two significant hints towards the Non-Farm Payrolls report on Friday.
EUR
Euro-zone services PMIs came out more or less in line with expectations, but the big elephant in the room remains the Greek crisis. While disaster was averted in the second week of July, the crisis is never too far from the headlines.
The next deadline is a significant Greek payment on August 20th, and the clock is ticking.
We have heard the “need for more progress”, a sign that talks aren’t about to conclude anytime soon.
As we’ve learned in mid July, pushing Greece out of the euro area was on the top of the German agenda, and danger certainly looms for the country and the single currency.
EUR/USD
EUR/USD has support at 1.0820, which was a bottom in May, followed by 1.0760. Resistance awaits at 1.0910 and 1.10.
It is important to remember that markets are thinner during this month: many traders are on vacation.
More: EUR/USD: Near Breakout – JP Morgan
Here is how is looks on the chart:
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