Greece Debt Deal All But Done?
Spotlight Market
Signs that a deal may be reached between Greece and its creditors has stopped the slide in the Euro for the time being.? The country is facing an upcoming payment of $1.6 billion to the International Monetary Fund scheduled for June 5th.? Without the debt relief, it was doubtful Greece would have been able to meet its obligation to the IMF, which would have had negative implications for the Eurozone.? European and Greek officials have denied that a deal is imminent, but the market?s favorable reaction to the news of a possible deal may put some pressure on both sides to get the deal done.
Fundamentals
The doom with the upcoming Greek debt payment has not been the only factor negatively affecting the Euro.? Recent Eurozone economic data has been extremely lackluster.? There was a stretch of time where European data seemed to be pointing up, whereas US economic data was showing signs of weakening.? However, recent housing and jobs data in the US has been stronger than expected, which has reversed the tide in the near-term.? The recent FOMC statement was dovish on the surface, which could be seen as positive for the Euro.? The minutes and comments from policymakers tell a different story.? The minutes suggest that Fed members really want to move forward with rate hikes, but are prevented from doing so by weaker economic metrics.? San Francisco Fed President John Williams reiterated that a rate hike from the Fed is always a possibility and that he believes that increases are coming by year?s end.? This is somewhat supportive of the greenback and could put pressure on the Euro, especially if European economic data does not see improvement.
Technical Notes? -? View Today’s Chart
Turning to the continuation chart, we see the June Euro forming a small double-top and reversing its month-long uptrend.? The Euro failed to reach the 38.2% Fibonacci retracement level, which can be seen as weak.? The June contract also has seen consecutive closes below the 50-day moving average, which can likely be interpreted as negative in the near-term.? The RSI indicator is showing oversold levels, which might offer some near-term support.
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