Because of the uncertainty surrounding the Greek sovereign debt situation, the euro has experienced considerable volatility, basically trading on whatever the headline of the day is.
Kathy Lien, director of currency research at GFT Forex, says the euro is driven by the talks behind a bond swap deal. “That’s really been putting the euro-dollar on a rollercoaster ride and dictating how it’s been trading,” she says. Placing support around 1.28 and resistance at about 1.3320, Lien says an agreement within the next month probably will lead to the euro trading much higher than where it is now. “We’ll still have a little bit of uncertainty, for the most part, but the deadline will be met and there will be more of a relief rally in the euro-dollar. Everyone who’s been waiting on the sidelines will be more encouraged to get back into the long-euro position.”
Though in agreement about Greece pushing the euro, Greg Michalowski, chief currency analyst at FXDD, says there could be problems that arise from the deal. “If there are some hiccups in any of those measures, either within the Greek government or outside through the EU, IMF, the EU countries, you know, if Germany balks, there could be a problem, and that would force the euro back to the downside. If all goes well, the euro has the potential to have a corrective rally. The market’s a bit nervous and driven by headlines,” Michalowski says. He places support at 1.2972 and resistance at the 1.3083 and then at 1.3140 area.