Euro Consolidates Ahead of Greek Parliament Vote


EUR/USD consolidated touching 1.0985 as investors await the outcome from the Greek parliament. Some angst ahead of Wednesday’s Greek vote is in the air, where uncertainty over how the Greek parliament will legislate remains. The Greek saga isn’t close to a resolution, and more trouble for the euro may be in the cards.

The deal on a Greek bailout is just two days old and EU Commission and France, which backed it officially are already questioning it, even before the Greek vote by lawmakers. The European Commission said Greece needs debt-mitigation and re-profiling and France’s Sapin said on French TV this morning that “we cannot help Greece if we maintain the same debt reimbursement burden on the Greek economy”. Not good timing, as the comments will back the dissenters in the Greek parliament and German lawmakers will now be asked to endorse talks based on a deal, that is already being questioned. The deal signed Monday only promises a review of repayment terms and payment schedules once reforms have been implemented.

Initial EUR/USD support comes in at the overnight low of 1.0965. An upward sloping trend line that comes in at 1.0940 follows. Resistance is seen near the 10-day exponential moving average at 1.1065. Additional resistance is seen near a downward sloping trend line that connects the highs in June with the highs in July and comes in near 1.1170.

The 10-day exponential moving average recently crossed below the 40-day exponential moving average which shows that a short term down trend is now in place. Additionally, momentum is negative with the MACD (moving average convergence divergence) printing in negative territory with a downward sloping trajectory which foreshadows lower future prices.

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