EUR Trading Outlook (23-02-2015)

EUR/USD was whipped about in NY trade as Greek headlines were the main drivers in thin markets. Early NY saw the pair add to Europe’s losses driven by a German Govt spokesman noting Greece’s proposal didn’t go far enough and EUR/JPY’s dive (drop from 135.10 towards 133.55). NY slipped EUR/USD to a 1.1278 low but bids near the key 1.1260/70 support zone couldn’t be seriously tested. Some short covering ensued. The lift accelerated after some positive Greek headlines hit the wires. EU’s Juncker stated “a Greek exit from the Euro won’t happen” and Eurogroup’s Dijsselbloem noted ‘ there is reason for optimism after talks with main players in Greek bailout talks”. The market leaned towards a deal and the pair rallied to 1.1430. The gains were then consolidated around the 1.1400 area but the pair dipped towards 1.1370 late in the day after Dijsselbloem noted the EZ ministers’ meeting on Greece was a first step to rebuild trust. This left the market with a less clear picture which aided the late-day sales. Traders are now on edge heading into the weekend as the Greek issue still seems in doubt. Sunday’s Sydney opening could be interesting if the Greek situation deteriorates.