The GBP/USD pair printed an intraday high of 1.5768 on Thursday even though the US personal spending in May rose at a fastest pace since 2009, while the weekly jobless claims stayed below 300K for the 16th consecutive week. The cable was highly volatile throughout the European session as rumours, official confirmations and denials about the pending Greek deal took centre stage. With no major UK data due today, the pair is once again at the mercy of overall market sentiment – largely influenced by the Greek issue.
Till now the European bond markets have remained calm, which indicates that markets expect a last minute deal before the June 30 deadline. However, risk aversion may set in as we head into the weekend. The first signs of risk aversion should emerge in the Eurozone bond markets – rise in periphery yields and fall in German yields. In this case, we could see the GBP/USD pair drop below 1.57 levels.
At the moment, the pair is trading at 1.5742. The spot failed to witness a daily close above 1.5749 (23.6% Fib R of 1.5169-1.5928) and struggled to rise and sustain above the same in the Asian session today. A failure to take out 1.5749 in the early European session could bring in fresh offers and drive the pair lower to 1.5675-1.5650. The down move could be extended further to 1.5638 (38.2% Fib R of 1.5169-1.5928) in case of signs of risk aversion in Eurozone bond markets. On the higher side, a break above 1.5763 (hourly 200-MA) could push the pair to 1.58 levels. In case of a surprise positive news over Greece, the up move could be extended to 1.5876 (50% Fib R of 1.7190-1.4564).
EUR/USD: Break below 1.1178 is bearish
The EUR/USD pair witnessed another volatile session on Thursday as the deadlock over Greek debt crisis persisted. Despite EUR/USD’s brief bounce from 1.1183 to 1.1228 in the early European session, the pair fell to 1.1154 before rising back to 1.1224. Since then, the pair has moved in the sideways manner in the range of 1.12-1.1180.
Another Eurogroup meeting is scheduled on Saturday morning, which is touted as a last effort to reach a deal before the June 30 deadline. The bond markets in the Eurozone remained calm on Thursday, thereby ensuring the EUR/USD pair turned range bound. It remains to be seen if the bond markets stay calm today. The spot could witness a fresh sell-off in case the periphery yields spike while German yields drop on Grexit fears. In case, the bond markets stay calm, we could see the pair continue its range bound trading with a slightly bearish tone.
At the moment, the pair is trading at 1.1184. The pair found support at 1.1178, which is the 161.8% Fib E of 1.1434-1.1291-1.1409. On the higher side, the pair has struggled to sustain above 1.1195 (150% Fib E of 1.1434-1.1291-1.1409). Fresh bids could be anticipated in case the pair manages to sustain above 1.1178 in the early European session. In this case, the pair could take out 1.1204 (23.6% Fib R of 1.1434-1.1133) and rise to 1.1221 (5-DMA) and 1.1248 (38.2% Fib R of 1.1434-1.1133). On the downside, a break below 1.1178 could push the pair down to 1.1150-1.1133. Given, a daily close above 50-DMA on Thursday, the technical outlook for the day is bullish.
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