The week started with USD trying to regain some of her losses from previous trading weeks. We saw EURUSD traded at 1.14 and GBPUSD traded at 1.59. Since then, EURUSD and GBPUSD have come of this level to trade below 1.120 and 1.58 respectively. The 1.20 level is a very important level, more like the demand and supply level. This level opens EURUSD either to the downside or back up.
The situation in Greece remains the major cause of volatility in the market. This has brought so much uncertainty into the market. The market is not sure if there will be a deal or no deal. Greece has presented a new proposal to her debtors on Monday but it was rejected again. According to Goldman Sachs, if Greece should default, EURUSD might probably reach parity. This means there will be huge sell off on EURUSD.
A member of the FOMC spoke yesterday about the possibility of a September rate hike. He said he sees a 50-50 chance of a possible rate hike. He also said if the economic data coming from the US continues to show more strength, this increases the odds of a possible rate hike. On the backs of this comments, traders bought USD putting more downward pressure on other pairs across board.
The market is waiting for the US GDP figures which will be out later today. This will give more insight into the strength of the US economy. If the figure comes out as expected or beyond expectation, this indicates that the US economy is now recovering from the Q1 slack. It should be recalled that the previous GDP figures came out negative at -0.7%. The figures today will help to actually clarify the USD direction. If it comes below expectation, USD might sell off and vice versa.