The euro is suffering worries about Greece and the dollar still enjoys the hawkish meeting minutes, even though they came before the disappointing Non-Farm Payrolls.
The result is that the deterioration in the pair continues, and it is nearing a loss of 400 pips on the week. Will it find legs to recover in the last moment or is the multi-year low of 1.0462 in danger as well?
Greece did pay the IMF the 460 million euros it was due to pay, but the euro-zone gave the debt stricken country 6 working days to reach an agreement on reforms.
And while the ECB raised the volume of the ELA program, it also serves as a sign that money is running loose from Greek banks. If there is no money in the banks, we could have an accidental “Grexit”, and that is a Pandora Box nobody really wants to deal with.
FOMC minutes still heard
But there is also a dollar story here: the FOMC meeting showed a hawkish tone among some members. This is not news: we always knew there are hawks and doves on the board. In addition, the meeting was held well before the terrible NFP was reported, and since its publication, Fed officials said it was bad and would influence their decisions.
So, expecting a hike in June is wishful thinking at this time. It could still happen, but data will need to improve rapidly.
But yet again, what will you buy?
Further support awaits at 1.0550 (a weak line), and the very round 1.05, which is already much stronger. The ultimate line in the sand is 1.0462 – the levels reached in March that were the lowest since 2003 – 12 years ago.
On the topside we could mention 1.0660, followed by 1.07 and 1.0750.
More: EUR/USD: Keep It Real With QE – Parity till year end – BNPP
In this week’s podcast, we discuss: USDown or greenback comeback? And also touch other topics: