The European 18-bloc currency dropped on Mondya as expected due to no solution found in talks of Greece and its major creditors. As there is a reasonable concern over the possible grexit and first scarve of eurozone’s credit, euro has been sold over the board.
Due to the critical situation, Greece had to take further steps and it decided to close its banks and impose capital controls due to fears among Greek citizens. Meanwhile the European Central Bank froze funding support to Greek banks and the country’s authorities have to deal now with their banking system with little room for manoeuvres.
This week will probably experience Greek banks completely shut down with the daily limit of 60 euro on cash withdrawals. Capital controls are about to last for even longer, counted in months.
Following the long serie of talks, no compromise has been reached and the blame falls now on Greek Prime Minister Alexis Tsipras, who announced referendum on Saturday and asked for an extension of Greek existing bailout until after the July 5th vote. This has been completely refused by eurozone’s officials, what Tsipras called as an ‘unprecedented act.’
Greece is now set to default on €1.6 billion of loans from one of its major creditor – the International Monetary Fund. The European Central Bank will be next in upcoming months.
Euro followed this situation with highly expected bearish rally, falling below $1.1 level and if no solution comes, traders expect it to remain below this psychological level. With dropping euro on EUR/USD currency pair, the same happenned on cross currency apirs as EUR/JPY, suffering over 2% plunge, or EUR/GBP, down over 1% at the time of writing.
Our long-term target on euro (on EUR/USD currency pair) remains at $1.0491, with the previous one at $1.0719. Nevertheless for an intraday trading, if you did not manage to jump into the train, we prefer now not to open new positions and take wait-and-see approach until new opportunities occur (with Greece, we will see them soon)
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