Greece was a key catalysts for the European Debt Crisis, but now has shown enough signs of improvement after restructuring its debt a couple years ago and now will return to the bond market tomorrow. The significance in Greece returning to the bond market is a tremendous vote of confidence to the euro’s survival. During the past four years, Greece has defaulted and received two bailouts. While the news is positive for the euro, actual economic growth is likely to remain sluggish and this return to the bond market does not signal that Greece is in the clear for steady economic health.
The euro may rangebound this week because further easing with conventional and unconventional measures will not be queued up at all this week. Germany’s disappointing trade figures are pretty much responsible for keeping the euro heavy today.
The EURUSD daily chart highlights the bullish Gartley pattern that formed on April 4th at 1.3670, which also coincided with the 100-day SMA. The start of this week, saw the bearish channel that I identified was invalidated. If price is able to close above 1.3800 after we get through the Fed’s Minutes, further upside may target a surge towards 1.3875. Major downside support comes from the 200-day SMA which is close to the psychological 1.3500 handle.
The trade: Buy EURUSD at 1.3800 with a stop loss at 1.3750 and a take profit at 1.3875 The Risk/Reward Ratio is 2:3
Edward J. Moya
WorldWideMarkets Online Trading