If you were looking for crazy market theatrics on this day in North American trade you were sorely disappointed as markets pretty much behaved in an orderly fashion. Even though the pall of a potential Greek calamity continues to hang over the investing world, you wouldn’t have seen the effects of it today. The EUR/USD remained between 1.07 and 1.08 and was largely driven more on US economic releases than anything else, and equities enjoyed a slow grind higher amid the constant noise of corporate earnings releases.
Despite the good US din enjoyed at the moment, the USD/JPY didn’t make much hay today. The 120 level seemed to act as a cap to any advances on the day and could potentially continue to act that way as we get closer to the end of the week. If we were to assume that risk of a Grexit were to become ever-present over the next couple of days, the USD/JPY could act in a safe haven type of fashion. That typically means that the JPY would increase in value and send the USD/JPY tumbling.
In addition to the potential fundamental reasons for a fall are the technical which shows that we are currently approaching the 61.8% Fibonacci retracement of the April high to low. Combined with the 120 psychological level, the Fibonacci guidepost may act as additional resistance on any attempts to advance. While I essentially made this same argument on the EUR/JPY yesterday on this site, that drop hasn’t yet come to fruition, and the potential Greek tragedy playing out over the next couple days isn’t likely to make anyone feel confident in holding risky assets.
Figure 1:
Source: www.forex.com
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