Trading the Greek Vote? AUD/USD Would Be A Better Bet

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Is EUR/USD the preferred pair to trade the Greek vote? This depends on the result. The Greek parliament is set to vote on the austerity measures at 12:00 GMT. Tension is mounting towards this critical event for the global economy.

A “yes” vote is a precondition for the next tranche of aid from the EU and IMF, as well as for a second bailout package. Expectations now lead towards an approval of the measures, and this makes the euro/dollar exposed to surprises, making way for alternatives. AUD/USD is a much better candidate.

While the Greek police is using tons of teargas to disperse protesters in Athens, it seems that the measures will pass. Members of the Pasok ruling party are likely to obey in large numbers. More importantly, not all opposition parties will vote “no”. As an absolute majority isn’t needed, a “yes” vote seems more likely.

And the market already prices it.

EUR/USD rallied and settled higher, capped by the 1.4375 line, but high above previous levels. This came in anticipation for the positive result.

So, if the parliament surprises and votes “no”, it will be a shocking disappointment that will send the euro down across the board.

But  an expected “yes” vote is quite tricky for the pair. On one hand, this is good news that should help the pair. On the other hand, we often see “buy the rumor, sell the fact” behavior. What exactly will happen? Hard to say.

So, a better way to trade it is using a more distinctive “risk” currency: the Australian dollar. The Aussie rises on hopes for the global economy, and falls when fear rules. In addition, AUD/USD is a more predictable pair than EUR/USD.

Also here, a “no” vote will likely send AUD/USD lower. But contrary to the risks concerning the euro, a “yes” vote has a better chance of starting a rally here.

What do you think?

For more on AUD/USD technical levels and events, see the Australian dollar outlook.

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About Author

Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

5 Comments

  1. I think you are right, there will probably be a yes vote and trading will get tricky in the EURUSD so best to steer clear. I’m not too sure about the AUDUSD, I don’t know that pair, but I will keep an eye on it since you mentioned it. It’s coming up soon…we’ll see what happens!

  2. Johnny Depp on

    my sentiment says NO… coz its just 5 years plan.. if the result is YES.. there will be a major CHAOS.. unless the greek government want that…

  3. Pingback: Clashes in Athens Mount, But Austerity Set to Pass | Forex Crunch

  4. Bonnie Smith Forex on

    EUR/USD rallied and settled higher, capped by the 1.4375 line, but high above previous levels.

  5. Well reasoned and very helpful view – got burned the last time under very similar circumstances and all signs per my analysis (H4) indicate little space up, but similarly for AUD too. Very little space up (though far less bearish divergences across the feed, the euro has divergences pointing down all over from M1 to H1). But could you delve into the basis of this buy the rumor sell the news behavior a bit more some other time – looks critical to success anticipating it.

    The Darkdoji