EURUSD seems poised to extend its slide as fears about Greek default linger ahead of next week’s IMF payment. We have long argued that the future of the troubled Eurozone member state should continue to haunt the single currency.
With the negotiations between Athens and its creditors expected to resume today, more indications that a deal remains elusive should undermine the EUR.
In addition, the surprisingly strong showing of the anti-austerity Podemos party at the Spanish local elections over the weekend could add to EUR-gloom.
In particular, evidence that contagion from Greece is starting to erode investor demand for EUR-denominated assets should weigh on the single currency.
Even in the event of more positive news flow, we anticipate only limited EUR upside risk, as the focus will quickly turn back to the ECB’s dovish policy stance.
We remain short EURUSD in our portfolio. *CA maintains a short EUR/USD on Friday from 1.1385 targeting a move to 1.0800, with a stop at 1.1680.
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