Yesterday the EUR/USD was once again driven by conflicting factors. Early in the session, investors' disappointment on the difficult EMU decision making process to reach a Greek deal prevailed. Later in the session, good US economic data and a positive sentiment on risk helped EUR/USD to reverse the early losses. After news of an old bond new bond swap by the ECB leaked out most investors were confused and worried.
Earlier in the day the EUR/USD extended the down move that started on Wednesday afternoon. Investors were disappointed on the lack of visibility and chaos in the process to approve a second Greek rescue package. There were no important economic data in Europe. Auctions in Spain and France went well, was not enough to stop the decline of EUR/USD. The pair reached an intraday low at 1.2974 at the start of the US trading session. From there a steady rebound kicked in. The US data were supportive. Especially the US jobless claims came out better than expected. The market traded the improvement in sentiment on risk rather than cyclical rebound of the US. During the afternoon session, the news flow on Europe and on a Greek debt deal turned more positive, too. It was all rumors and diffuses headlines. However, several technical details (including those on ECB involvement in a Greek debt swap) suggest that Europe is in the last straight line to conclude a debt deal. At the heart of the matter, markets saw a good reason to turn positive again. Stocks rebounded and EUR/USD even reached intraday highs in the mid 1.31 area and closed the session at 1.3130, up from a 1.3066 close on Wednesday evening.
Today, the economic in Europe is lean. In the US, the CPI is scheduled for release. Don't expect this report to be a big issue for EUR/USD trading. So, the focus will again be on Europe and on the Greek debt deal. From a currency point of view, the issue is whether there is a workable plan on the table that can be approved on Monday. The markets move from optimistic to pessimistic in minutes, at this writing the markets are optimistic that some progress has been made. Of course, it was already demonstrated several times in this negotiation that there is no agreement unless all parties involved have signed on the dotted lines. In perspective assume that sentiment on the euro shouldn't be that bad. However, we don't expect any euro euphoria yet.
EUR/USD Pivot Points (Time Frame: 1 Day)
Name S3 S2 S1 Pivot R1 R2 R3