EUR/USD see-saw continues – up on bunds, down on Greece

EUR/USD is providing a lot of  excitement: rising  alongside German bunds and unexplained USD  weakness, before falling on Greek worries.

One thing is certain: there is no lack of volatility. Here are the latest movers:

• Rising with German bunds: since mid April, when “Bond King” Bill Gross said that German bonds, known as bunds, are the “short of a lifetime”, there has certainly been a strong correlation between yields and the  common currency.  Since then, we have seen many ups and downs and the pace is intensifying. Draghi sent yields up. They then fell, but a new rise helped the euro jump more than 200 pips.
• Greece:  Negotiations are still going on, but since the great escalation late last week, things aren’t really improving and it seems that patience is running out on the European side. The latest comes from German finance minister Woflgang Schäuble who  not only commented on the differences he has with his Greek counterpart Yanis Varoufakis, but also said “It would be daft to accept Syriza’s blame game”. Their Finnish colleague said that “keeping Greece in the euro-zone is a two way street.
• USD weakness: The US released  an  excellent jobs report, that  provided hope on jobs, wages and long term employment. It sent the dollar up, but Friday is probably too far in the past. Traders didn’t wait too long to  take profits and the dollar plunged again, without any clear reason. We soon have  another jobs related figure, one that the Fed watches closely. See how to trade the JOLTS number.

So, EUR/USD went all the way from below 1.11 to 1340 (resistance) and now down to weak support at 1.1220. What’s next?

Here is how it looks on the chart:

 

In this week’s podcast, we explain why EUR rallied on Draghi, what’s next, discuss oil and gas, run through the Plus500 story and preview next week’s events.

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