EURUSD: Short Term Fundamental, Technical Outlook & Forecast

Fundamental drivers for the EURUSD unlikely to live up to their potential to move the pair, trading ideas for the coming 24-48 hours.

Summary

Despite the apparent drama of US jobs reports and 2 Greek deadlines, little volatility expected in the next 48 hours.

Fundamental drivers and technical outlook for the next 24-48 hours.

Forecast, likely trading range, and what to do if upside and downside breakouts from that trading range.

Fundamental Drivers

Theoretically, the EURUSD should be volatile Monday and Tuesday because:

  • We could see some after-effects of Friday’s US monthly jobs reports
  • The May 11 and 12 Greek Deadlines

However we believe that the EURUSD will continue to bounce around within its recent trading range. Why? The above events are unlikely to change market expectations.

The US jobs reports: These didn’t change market expectations for a late 2015 rate hike. They weren’t great, but they also showed enough improvement from the prior reports to support the Fed’s belief that the prior month’s weak readings were temporary and not indicative of longer term weaknesses.

The Greek deadlines: Deadlines for political deal, empty Greek Treasury likely to be deferred to May 31

  • --May 11th: Greece was supposed to have a reform agreement with the EU by May 11th. Few expect that to happen, and fewer still will be surprised. Lenders want to see reforms on Greek public sector jobs and pensions, yet Greece wants EU concessions before committing to reforms. The usual brinksmanship so that leaders on each side can claim they fought for their voters, before inflicting a deal that voters in funding nations and in Greece will dislike.
  • --May 12th: EUR 750 million of Greek bonds come due, however Greece is likely to get some kind of extension, and Greece claims to have enough cash to meet interest payments until June.

Traders have grown used to both a lack of progress with Greece and last minute extensions.

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Disclosure: The above represents the personal opinion of our Chief Analyst, and is not represented as any guarantee of what will happen by him or ...

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