Tomorrow we have the major headline event risk of the Greek parliament vote on the new austerity measures. The new austerity measures are required to close the Greek government budget gap. This is also a requirement of the European Central Bank, International Monetary Fund and Eurogroup before they will continue to provide funds for the first Greek bailout. If the vote fails there may be a “Plan B” for the Euro Zone but Greece is likely to default anyway.
The news that supported the EUR/USD today was news that Greece’s creditors may roll over 70% of their bonds to voluntarily help Greece from going into bankruptcy. French banks (who are probably the largest private owners of Greek debt) were agreeing to voluntary participation in the bond rollover program.
The EUR/USD surprised me with its strength today. I added to my short position around 1.4225 but then was stopped out at break even when the market came back up. The strength of the market led me to reverse my position to a long. We now need to set targets and look at where the market is headed before and after the Greek vote. The rise of the EUR/USD makes the drop from June 22nd look like a “B” wave which means it will most likely be fully retraced. This would lead to 1.4480 as a target for the end of the “C” wave before reversing lower again. A closer target that I will be watching is the 1.4360 area. Right now we’re in the 1.4290s and the candles look like the EUR/USD will definitely head higher from here.