EURUSD is coiling to spring but which way?

It's getting very interesting in the euro as we find ourselves in a very balanced market. Attempts at the upside are being knocked back with gusto and the same goes for the downside. at the moment we are playing a very tight range and we know those don't last forever

EURUSD H4 chart

The arrows indicate the main levels we've been sitting in. The May trendline has been marking a higher top and the even shorter dated June trendline has been supporting the bottom. The euro has been largely ignoring the Greece news and only reacts to the more pertinent headlines with smallish moves, and the levels have been holding. That may draw some traders into a false sense of security. Previously I said that any Greek deal would probably not bring a huge move but I'm starting to change my mind. The longer the euro keeps its range tight the more pressure is building within it

The bond moves are also playing a part but the fact that these flows are also failing to bring a break in the euro means they can be largely ignored. They are just part of the current intraday noise and will only likely do damage after any headlines come out

What's going to be the tipping point?

It's either Greece, or the Fed, or both that's going to be the catalyst but even then it's tough to pick a side. The FOMC could be hawkish but the euro may bounce back from any headline move while the Greek 'deal or no deal' is still in the mix. Conversely, a dovish Fed may see any gains tempered again by the Greek event

Ultimately you've got to go with a break either way and that could come from the FOMC first. After the FOMC any moves will need to be kept on a very tight leash for when Greece goes back to the front page. If we don't get any deal over the Eurogroup meeting, and it's confirmed that there is an emergency summit over the weekend, then I think we're going to see some heavy scaling back of positions into the weekend

As far as the break points go, 1.1380/1.1400 is the big topside level, and I agree with Adam that if that level does break, we are likely to see a big move and 1.1500+ will be visited very quickly

For the downside 1.1180 and the 38.2 fib and 200 H4 at 1.1169/72 would be worth keeping an eye on for a break through but I'd want to see 1.11 taken out for a chance to see some real downside. The big target below is still the 1.1040/50 level and a break there will see more than a few longs hitting the exit doors and the sellers gaining control again

As I've just said don't be fooled into thinking that the euro is playing pussycat right now. We've got some big headlines coming up this week and they are likely to send us to pastures new. The question is which way?