It seems we have a constant stream of rumours and comments relating to the EU/Greek situation and it’s difficult to look past all the noise and come up with a coherent trading strategy. The EUR fell very heavily on the Wellink comments regarding the size of the bail-out fund but then reversed and even made a net small gain on the FT article saying an EU/IMF deal had been reached (with lots of ifs attached- like more austerity measures for Greece and no details on which stage of Greek financing would be addressed).
Then we must also ask ourselves, how relevant is Greece to the entire EU picture and would a default inevitably lead to further defaults elsewhere and an EU banking crisis?
The big money Sovereign players are still buying EUR/USD dips so it looks like they believe that the ultimate ugly contest will eventually be won by the USD and that these phases where the market turns bearish on the EUR are just that, phases.
The great thing about a weekly chart in my opinion is that it takes noise in its stride. My reading of the current weekly EUR/USD chart is that we are in an uptrend that is currently retracing. Pullbacks towards 1.3650 look possible without endangering the uptrend and any rallies back towards 1.4700 are likely to meet heavy supply. In uncertain times, expect plenty of volatility and I wouldn’t be surprised if we see both sides of this 10 big figure range over the next 6 to 8 weeks.
